EXHIBIT 2.1
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Execution Copy
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AGREEMENT AND PLAN OF MERGER
by and among
DYNATECH CORPORATION
and
CDRD MERGER CORPORATION
dated as of
December 20, 1997
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TABLE OF CONTENTS
ARTICLE I
THE MERGER............................................................... 1
Section 1.1 The Merger.................................................. 1
Section 1.2 Effective Time.............................................. 2
Section 1.3 Closing..................................................... 2
Section 1.4 Articles of Organization; By-Laws........................... 2
Section 1.5 Directors and Officers of the Surviving Corporation......... 3
ARTICLE II
CONVERSION OF SHARES..................................................... 3
Section 2.1 Conversion of Capital Stock................................. 3
Section 2.2 Exchange of Certificates.................................... 4
Section 2.3 Options..................................................... 7
Section 2.4 Dissenting Shares........................................... 8
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY............................ 8
Section 3.1 Organization................................................ 8
Section 3.2 Capitalization.............................................. 9
Section 3.3 Authorization; Validity of Agreement........................ 11
Section 3.4 No Violations; Consents and Approvals....................... 12
Section 3.5 SEC Reports and Financial Statements........................ 13
Section 3.6 Absence of Certain Changes.................................. 14
Section 3.7 Absence of Undisclosed Liabilities.......................... 14
Section 3.8 Information in Form S-4; Proxy Statement;
Exchange Act Schedules..................................... 14
Section 3.9 Employee Benefit Plans; ERISA............................... 15
Section 3.10 Litigation; Compliance with Law............................ 17
Section 3.11 Intellectual Property...................................... 18
Section 3.12 Contracts.................................................. 19
Section 3.13 Taxes...................................................... 22
Section 3.14 Environmental Matters...................................... 23
Section 3.15 Required Vote by Company Stockholders...................... 24
Section 3.16 Brokers.................................................... 24
Section 3.17 Opinions of Financial Advisors............................. 24
Section 3.18 Assets..................................................... 25
Section 3.19 Real Property.............................................. 26
Section 3.20 Insurance.................................................. 26
Section 3.21 Labor Matters, etc......................................... 27
Section 3.22 Disclosure................................................. 27
Section 3.23 Rights Agreement........................................... 27
Section 3.24 Takeover Statutes.......................................... 27
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF MERGERCO............................... 28
Section 4.1 Organization................................................ 28
Section 4.2 Authorization; Validity of Agreement........................ 28
Section 4.3 Consents and Approvals; No Violations....................... 29
Section 4.4 Information in Form S-4; Proxy Statement;
Exchange Act Schedules..................................... 30
Section 4.5 Financing................................................... 31
Section 4.6 Beneficial Ownership of Shares.............................. 31
Section 4.7 Brokers..................................................... 31
Section 4.8 Formation of MergerCo; No Prior Activities.................. 31
ARTICLE V
COVENANTS................................................................ 32
Section 5.1 Interim Operations of the Company........................... 32
Section 5.2 No Solicitation by the Company.............................. 35
Section 5.3 Access to Information....................................... 37
Section 5.4 Further Action; Reasonable Best Efforts..................... 38
Section 5.5 Employee Benefits........................................... 39
Section 5.6 Shareholders' Meeting; Form S-4; Proxy Statement............ 39
Section 5.7 Notification of Certain Matters............................. 42
Section 5.8 Directors' and Officers' Insurance and Indemnification...... 42
Section 5.9 Publicity................................................... 43
Section 5.10 Shareholder Litigation..................................... 43
Section 5.11 Recapitalization........................................... 43
Section 5.12 Conveyance Taxes........................................... 44
Section 5.13 Delisting.................................................. 44
Section 5.14 Affiliates................................................. 44
Section 5.15 Letter as to Solvency...................................... 45
ARTICLE VI
CONDITIONS............................................................... 45
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Section 6.1 Conditions to Each Party's Obligation To Effect
the Merger................................................. 45
Section 6.2 Conditions to the Obligation of the Company to
Effect the Merger.......................................... 46
Section 6.3 Conditions to Obligations of MergerCo to Effect
the Merger................................................. 46
ARTICLE VII
TERMINATION.............................................................. 47
Section 7.1 Termination................................................. 47
Section 7.2 Effect of Termination....................................... 49
ARTICLE VIII
MISCELLANEOUS............................................................ 49
Section 8.1 Fees and Expenses........................................... 50
Section 8.2 Amendment; Waiver........................................... 51
Section 8.3 Survival.................................................... 52
Section 8.4 Notices..................................................... 52
Section 8.5 Interpretation.............................................. 54
Section 8.6 Headings; Schedules......................................... 54
Section 8.7 Counterparts................................................ 54
Section 8.8 Entire Agreement; Third Party Beneficiaries................. 54
Section 8.9 Severability................................................ 55
Section 8.10 Governing Law.............................................. 55
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SCHEDULES
Schedule 2.3 Company Stock Options
Schedule 3.1(a) Active Subsidiaries
Schedule 3.1(b) Other Subsidiaries
Schedule 3.2 (a) Capitalization
Schedule 3.2 (b) Ownership
Schedule 3.4 (a) No Violations; Consents and
Approvals
Schedule 3.4 (b) Filings by the Company
Schedule 3.6 Absence of Certain Changes
Schedule 3.7 Absence of Undisclosed Liabilities
Schedule 3.9 (b) Employee Benefit Plans
Schedule 3.9 (c) Severance Benefits
Schedule 3.10 (a) Litigation
Schedule 3.10 (b) Compliance with Laws
Schedule 3.11 Intellectual Property
Schedule 3.12 (a) Contracts
Schedule 3.13 Taxes
Schedule 3.14 (c) Environmental Matters
Schedule 3.18 Assets
Schedule 3.18 (b) Certain Liens
Schedule 3.19 (a)(i) Formerly Owned Property
Schedule 3.19 (a)(ii) Leases
Schedule 3.20 Insurance Policies
Schedule 4.3 (b) Filings by the MergerCo
Schedule 5.1 (iii) Interim Operations
EXHIBITS
Exhibit A Form of Articles of Organization of
Surviving Corporation
Exhibit B Form of Affiliates' Letter
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TABLE OF DEFINED TERMS
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Term Section
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Acquiring Person 3.23
Active Subsidiaries 3.1
Aggregate Merger Consideration Value 2.3
Antitrust Division 5.4(b)
Articles of Merger 1.2
Articles of Organization 3.1
Assets 3.18(a)
Balance Sheet 3.7
Certificate of Merger 1.2
Certificates 2.2(b)
CD&R 8.1(b)
Closing 1.3
Closing Date 1.3
Code 3.9(b)(v)
Collective Bargaining Agreement 3.21
Company Recitals
Company Acquisition Agreement 5.2(b)
Company Authorized Preferred Stock 3.2(a)
Company Common Stock 2.1
Company Intellectual Property 3.11
Company Real Property 3.19
Company Reports 3.5
Company SEC Documents 3.5
Company Stock Options 2.3
Company Stock Plans 2.3
Company Superior Proposal 5.2(b)
Company Takeover Event 5.2(a)
Company Takeover Proposal 5.2(a)
Competition Laws 5.4(b)
Confidentiality Agreement 5.3
Consolidated Group 3.13(b)
Delaware Secretary of State 1.2
DGCL Recitals
Disclosure Schedule 3.1
Dissenting Shares 2.4
Distribution Date 3.23
Effective Time 1.2
Employee Stock Purchase Plan 2.3
Environmental Law 3.14(d)
ERISA Plans 3.9(a)
Evaluation Material 5.3
Exchange Act 3.4(b)
Exchange Agent 2.2(a)
Expenses 8.1(b)
Fee 8.1(b)
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Form S-4 3.8(a)
Formerly Owned Property 3.19
FTC 5.4(b)
Fund Recitals
GAAP 3.5
Governmental Entity 3.4(b)
Hazardous Materials 3.14(d)
HSR Act 5.4(b
Identified Contracts 3.12(a)
Indemnified Parties 5.8(a)
Intellectual Property 3.11
Laws 3.4(a)
Leased Real Property 3.19
Leases 3.19
Lien 3.18
Litigation 3.10(a)
Massachusetts Secretary of State 1.2
Material Adverse Effect 3.1
Material Contracts 3.12(a)
MBCL Recitals
Merger 1.1
MergerCo Recitals
MergerCo Common Stock 2.1
MergerCo Disclosure Schedule 4.3(b)
Merger Consideration 2.1(a)
New Certificates 2.2(a)
NYSE 2.3
Owned Real Property 3.19
Permits 3.10(c)
Permitted Liens 3.18(b)
Person 3.1
Plans 3.9(a)
Proxy Statement 5.6(a)
Real Property 3.19
Recapitalized Common Stock 2.1(b)
Registration Period 5.13
Representative 5.3
Rights 2.1
Rights Agreement 3.2(a)
Schedule 13E-3 5.6(c)
SEC 3.5
Securities Act 3.4(b)
September 30, 1997 Balance Sheet 3.18
Shares 2.1
Special Committee Recitals
Special Meeting 5.6(a)
Stock Acquisition Date 3.23
Subsidiary 3.1
Surviving Corporation 1.1
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Takeover Statute 3.24
Tax Returns 3.13(b)
Taxes 3.13(b)
Triggering Event 3.23
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AGREEMENT AND PLAN OF MERGER
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AGREEMENT AND PLAN OF MERGER, dated as of December 20, 1997, by and
between Dynatech Corporation a Massachusetts corporation (the "Company"), and
CDRD Merger Corporation, a Delaware corporation ("MergerCo") formed by Xxxxxxx,
Dubilier & Rice Fund V Limited Partnership ("Fund").
WHEREAS, the Board of Directors of MergerCo has approved, and deems it
advisable and in the best interests of the stockholders of MergerCo to
participate in the recapitalization of the Company, upon the terms and subject
to the conditions set forth herein;
WHEREAS, the Board of Directors of the Company, based upon the
unanimous recommendation of a special committee of independent directors of the
Company (the "Special Committee"), has approved, and deems it advisable and in
the best interests of the shareholders of the Company to consummate, the
recapitalization of the Company, upon the terms and subject to the conditions
set forth herein; and
WHEREAS, in furtherance of such recapitalization, the Board of
Directors of MergerCo and the Board of Directors of the Company have each
approved this Agreement and the merger of MergerCo with and into the Company in
accordance with the terms of this Agreement, the Business Corporation Law of The
Commonwealth of Massachusetts (the "MBCL") and the Delaware General Corporation
Law (the "DGCL");
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. (a) Upon the terms and subject to the
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conditions of this Agreement and in accordance with the applicable provisions of
the MBCL, at the Effective Time (as defined in Section 1.2 hereof), MergerCo
shall be merged (the "Merger") with and into the Company and the separate
corporate existence of MergerCo
shall cease. After the Merger, the Company shall continue as the surviving
corporation (sometimes hereinafter referred to as the "Surviving Corporation")
and shall continue to be governed by the laws of the Commonwealth of
Massachusetts. The Merger shall have the effect as provided in the applicable
provisions of the MBCL and the DGCL. Without limiting the generality of the
foregoing, upon the Merger, all the rights, privileges, immunities, powers and
franchises of the Company and MergerCo shall vest in the Surviving Corporation
and all restrictions, obligations, duties, debts and liabilities of the Company
and MergerCo shall be the obligations, duties, debts and liabilities of the
Surviving Corporation.
Section 1.2 Effective Time. On or as promptly as practicable
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following the Closing (as defined in Section 1.3), MergerCo and the Company will
cause the appropriate articles of merger (the "Articles of Merger") to be
executed and filed with the Secretary of State of the Commonwealth of
Massachusetts (the "Massachusetts Secretary of State") in such form and executed
as provided in Section 79 of the MBCL and the appropriate certificate of merger
(the "Certificate of Merger") to be executed and filed with the Secretary of
State of the State of Delaware (the "Delaware Secretary of State") in such form
and executed as provided in Section 252(c) of the DGCL. The Merger shall become
effective on the date on which the Articles of Merger and the Certificate of
Merger have been duly filed with the Massachusetts Secretary of State and the
Delaware Secretary of State, respectively, or such time as is agreed upon by the
parties and specified in the Articles of Merger and the Certificate of Merger,
but not later than 30 days after such filings, and such time is hereinafter
referred to as the "Effective Time."
Section 1.3 Closing. The closing of the Merger (the "Closing") will
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take place at 10:00 a.m., New York time, on a date to be specified by the
parties, which shall be no later than the second business day after satisfaction
or waiver of all of the conditions set forth in Article VI hereof (the "Closing
Date"), at the offices of Debevoise & Xxxxxxxx, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, unless another date or place is agreed to in writing by the parties
hereto.
Section 1.4 Articles of Organization; By-Laws. Pursuant to the
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Merger, (x) the restated articles of organization, as amended, of the Company in
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the form attached as Exhibit A hereto, shall be the articles of
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organization of the Surviving Corporation until thereafter amended as provided
by applicable law and such articles of organization and (y) the By-laws of the
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Company, as in effect immediately prior to the Effective Time, shall be the By-
laws of the Surviving Corporation until thereafter amended as provided by
applicable law, the articles of organization of the Surviving Corporation and
such By-laws.
Section 1.5 Directors and Officers of the Surviving Corporation.
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(a) The directors of MergerCo immediately prior to the Effective Time
shall, from and after the Effective Time, be the directors of the Surviving
Corporation until their successors shall have been duly elected or appointed and
qualified or until their earlier death, resignation or removal in accordance
with the Surviving Corporation's articles of organization and By-laws.
(b) The officers of the Company immediately prior to the Effective
Time shall be the initial officers of the Surviving Corporation and shall hold
office until their respective successors are duly elected and qualified, or
their earlier death, resignation or removal.
ARTICLE II
CONVERSION OF SHARES
Section 2.1 Conversion of Capital Stock. As of the Effective Time,
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by virtue of the Merger and without any action on the part of the holders of any
shares of common stock, par value $.20 per share, of the Company (referred to
herein, together with the rights (the "Rights") associated therewith pursuant to
the Rights Agreement (as defined in Section 3.2(a)), the "Shares" or "Company
Common Stock") or the common stock, par value $.01 per share, of MergerCo (the
"MergerCo Common Stock"):
(a) Each issued and outstanding share of Company Common Stock (other
than (i) Shares to be cancelled in accordance with Section 2.1(c) and (ii)
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Dissenting Shares covered by Section 2.4) shall be converted into the right to
receive (A) $47.75 in cash, payable to the holder thereof, without interest and
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(B) 0.5 shares of Recapitalized Common Stock (as defined below) (collectively,
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the "Merger Consideration"), upon surrender of the certificate formerly
representing such share of Company Common Stock in the
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manner provided in and otherwise in accordance with Section 2.2. All such shares
of Company Common Stock, when so converted, shall no longer be outstanding and
shall automatically be cancelled and retired and shall cease to exist, and each
holder of a certificate representing any such Shares shall cease to have any
rights with respect thereto, except the right to receive the Merger
Consideration therefor upon the surrender of such certificate in the manner
provided in and in accordance with Section 2.2.
(b) Each issued and outstanding share of MergerCo Common Stock shall
be converted into and become one fully paid and nonassessable share of common
stock, no par value per share, of the Surviving Corporation (the "Recapitalized
Common Stock").
(c) All shares of Company Common Stock that are held by the Company
as treasury stock or that are held by MergerCo shall be cancelled and retired
and shall cease to exist and no Merger Consideration shall be delivered in
exchange therefor.
Section 2.2 Exchange of Certificates.
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(a) Prior to the Effective Time, MergerCo shall designate the
Company's registrar and transfer agent, or The Chase Manhattan Bank (or any
successor thereto), or such other bank or trust company as may be approved in
writing by the Company (which approval shall not be unreasonably withheld), to
act as exchange agent for the holders of Shares in connection with the Merger,
pursuant to an agreement providing for the matters set forth in this Section 2.2
and such other matters as may be appropriate and the terms of which shall be
reasonably satisfactory to the Company (the "Exchange Agent"), to receive the
certificates (the "New Certificates") representing the shares of the
Recapitalized Common Stock and the funds to which holders of Shares shall become
entitled pursuant to Section 2.1(a). At the Effective Time, the Surviving
Corporation will deposit in trust with the Exchange Agent, for the benefit of
holders of Company Common Stock, (i) the funds necessary to complete the
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payments contemplated by Sections 2.1(a) and 2.2(c) on a timely basis and (ii)
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the New Certificates.
(b) At the Effective Time, the Surviving Corporation will instruct
the Exchange Agent to promptly, and in any event not later than three business
days following the Effective Time, mail (and to make available
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for collection by hand) to each holder of record of a certificate or
certificates, which immediately prior to the Effective Time represented
outstanding shares of Company Common Stock (the "Certificates"), whose Shares
were converted pursuant to Section 2.1(a) into the right to receive the Merger
Consideration (i) a letter of transmittal (which shall specify that delivery
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shall be effected, and risk of loss and title to the Certificates shall pass,
only upon delivery of the Certificates to the Exchange Agent and shall be in
such form and have such other provisions as MergerCo and the Company may
reasonably specify) and (ii) instructions for use in effecting the surrender of
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the Certificates in exchange for the Merger Consideration (which shall provide
that at the election of the surrendering holder, Certificates may be
surrendered, and payment therefor collected, by hand delivery). Upon surrender
of a Certificate for cancellation to the Exchange Agent or to such other agent
or agents as may be appointed by the Company, together with such letter of
transmittal, duly executed, the holder of such Certificate shall be entitled to
receive in exchange therefor the Merger Consideration for each share of Company
Common Stock formerly represented by such Certificate, to be mailed (or made
available for collection by hand if so elected by the surrendering holder)
within three business days of receipt thereof, and the Certificate so
surrendered shall forthwith be cancelled. If payment of the Merger Consideration
is to be made to a person other than the person in whose name the surrendered
Certificate is registered, it shall be a condition of payment that the
Certificate so surrendered shall be properly endorsed or shall be otherwise in
proper form for transfer and that the person requesting such payment shall have
paid any transfer and other taxes required by reason of the payment of the
Merger Consideration to a person other than the registered holder of the
Certificate surrendered or shall have established to the satisfaction of the
Surviving Corporation that such tax either has been paid or is not applicable.
Until surrendered as contemplated by this Section 2.2, each Certificate (other
than Certificates representing Dissenting Shares) shall be deemed at any time
after the Effective Time to represent only the right to receive the Merger
Consideration as contemplated by this Section 2.2.
(c) Notwithstanding the foregoing, no fractions of a share of
Recapitalized Common Stock shall be issued in the Merger, but in lieu thereof
each holder of Shares otherwise entitled to a fraction of a share of
Recapitalized Common Stock shall, upon surrender of his or her certificate
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or certificates, be entitled to receive an amount of cash (without interest)
determined by multiplying the fractional share interest to which such holder
would otherwise be entitled by an amount equal to $2.50.
(d) In the event any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the Person claiming
such Certificate to be lost, stolen or destroyed, the Exchange Agent will issue
in exchange for such lost, stolen or destroyed Certificate the Merger
Consideration deliverable in respect thereof as determined in accordance with
this Article II, provided that the Person (as defined in Section 3.1) to whom
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the Merger Consideration is paid shall, as a condition precedent to the payment
thereof, give the Surviving Corporation a bond in such sum as it may direct or
otherwise indemnify the Surviving Corporation in a manner satisfactory to it
against any claim that may be made against the Surviving Corporation with
respect to the Certificate claimed to have been lost, stolen or destroyed.
(e) After the Effective Time, the stock transfer books of the Company
shall be closed and there shall be no transfers on the stock transfer books of
the Surviving Corporation of Shares which were outstanding immediately prior to
the Effective Time. If, after the Effective Time, Certificates are presented to
the Surviving Corporation, they shall be cancelled and exchanged for the Merger
Consideration as provided in this Article II.
(f) Any portion of the funds deposited with the Exchange Agent (and
the proceeds of any interest and other income received by the Exchange Agent in
respect of all such funds) and any New Certificates that remain unclaimed by the
former stockholders of the Company six months after the Effective Time shall be
delivered to the Surviving Corporation. Any former shareholders of the Company
who have not theretofore complied with this Article II shall thereafter look
only to the Surviving Corporation for payment of any Merger Consideration that
may be payable upon surrender of any Certificates such shareholder holds, as
determined pursuant to this Agreement, without any interest thereon.
(g) None of MergerCo, the Company, the Surviving Corporation, the
Exchange Agent or any other person shall be liable to any former holder of
shares of Company Common Stock for any amount properly delivered to a public
official
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pursuant to applicable abandoned property, escheat or similar laws.
(h) Any payment made pursuant to this Section 2.2 shall be subject to
and made net of applicable withholding taxes.
Section 2.3 Options. The Board shall take all actions necessary or
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appropriate to cause all options to purchase Company Common Stock (individually,
a "Company Stock Option" and collectively, the "Company Stock Options") granted
to any current or former employee or director of the Company or any Subsidiary
under any of the Company's 1982 Incentive Stock Option Plan, 1992 Stock Option
Plan or 1994 Stock Option or Incentive Plan prior to the date hereof
(collectively, the "Company Stock Plans") and that are outstanding immediately
prior to the Effective Time to be fully vested and exercisable immediately prior
to the Effective Time in accordance with the terms of the Company Stock Plans
and the individual agreements evidencing such Company Stock Options. Each
Company Stock Option that is not exercised prior to the Effective Time shall,
subject to the consent of the holder thereof, be cancelled at the Effective Time
and, in consideration thereof, each holder of such a Company Stock Option will
be entitled to receive, for each share of Company Common Stock subject to such
Company Stock Option, an amount in cash equal to the excess, if any, of the sum
(such sum, the "Aggregate Merger Consideration Value") of (i) $47.75 and the
-
cash value of 0.5 shares of Recapitalized Common Stock, such cash value to be
$1.25, representing one half of the per share price paid by the Fund for a share
of common stock of MergerCo, over (ii) the per share exercise price for such
--
share of Company Common Stock, without interest. Amounts contributed on or
prior to March 31, 1998 for the purchase of Company Common Stock pursuant to the
terms of the Employee Stock Purchase Plan that have not theretofore been applied
to the purchase of such Company Common Stock in accordance with the terms of
such plan shall be applied to the purchase of such Company Common Stock
immediately prior to the Effective Time based on a purchase price per share
equal to 85% of the lesser of (x) the closing price per share of Company Common
-
Stock on the New York Stock Exchange ("NYSE") on October 1, 1997 and (y) the
-
Aggregate Merger Consideration Value, and the Employee Stock Purchase Plan shall
be amended as required by the proviso contained in Section 5.1(d)(ii) and shall
be terminated immediately following the consummation of the purchase of Company
Common Stock contemplated hereby. Each share of Company Common Stock issued in
accordance with the
7
immediately preceding sentence shall be treated in the same manner as each other
share of Company Common Stock outstanding at the Effective Time. The Company
shall use its reasonable best efforts to obtain prior to the Effective Time any
consent of current or former employees and/or directors required to effect the
cancellation of options contemplated hereby. Notwithstanding the foregoing, the
Company Stock Options of the individuals listed on Schedule 2.3 (as such
Schedule 2.3 may be amended from time to time after the date hereof and prior to
the Effective Time by MergerCo to include additional employees, with the consent
of each such additional employee) shall, in connection with the Merger, be
treated as set forth on Schedule 2.3. The amounts payable pursuant to this
Section 2.3 shall be paid as soon as reasonably practicable following the
Closing Date and shall be subject to and made net of all applicable withholding
taxes.
Section 2.4 Dissenting Shares. Notwithstanding anything in this
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Agreement to the contrary, Shares which are issued and outstanding immediately
prior to the Effective Time and which are held by shareholders who have validly
demanded payment of the fair value for such shareholders' shares as determined
by appraisal in accordance with the MBCL (the "Dissenting Shares"), shall not be
converted into or be exchangeable for the right to receive the Merger
Consideration provided in Section 2.1(a) of this Agreement, unless and until
such holder shall have failed to perfect or shall have effectively withdrawn or
lost such holder's right to appraisal and payment under the MBCL. If such
holder shall have so failed to perfect or shall have effectively withdrawn or
lost such right, such holder's Shares shall thereupon be deemed to have been
converted into and to have become exchangeable for, at the Effective Time, the
right to receive the consideration provided for in Section 2.1 of this
Agreement, without any interest thereon.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to MergerCo as of the date hereof
that:
Section 3.1 Organization. Each of the Company and its Active
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Subsidiaries (as hereinafter defined) is a corporation or other entity duly
organized, validly existing, and in good standing under the laws of the
8
jurisdiction of its incorporation or organization, and has all requisite
corporate power and authority to own, lease, use and operate its properties and
to carry on its business as it is now being conducted. Each of the Company and
its Subsidiaries (as hereinafter defined) is qualified or licensed to do
business as a foreign corporation and is in good standing in each jurisdiction
in which it owns real property or in which the nature of the business conducted
by it makes such qualification or licensing necessary, except where the failure
to be so qualified or licensed in the aggregate would not have or result in a
Material Adverse Effect. The term "Material Adverse Effect" shall mean any
change, effect, event, occurrence or state of facts that is, or would reasonably
be expected to be, materially adverse to the business, assets, liabilities,
results of operations or financial or other condition of the Company and its
Subsidiaries taken as a whole. None of the Company or any of its Subsidiaries is
in breach or violation of any of its certificate of incorporation, by-laws or
other organizational documents. The Company has previously delivered to MergerCo
a complete and correct copy of each of its restated articles of organization, as
amended (the "Articles of Organization") and By-Laws, as currently in effect.
"Active Subsidiary" shall mean each of the Subsidiaries of the Company other
than those Subsidiaries which conduct no business and hold no more than de
minimis assets. Schedule 3.1(a) of the disclosure schedule delivered by the
Company to MergerCo on or prior to the date hereof (the "Disclosure Schedule")
sets forth a complete and correct list of the Active Subsidiaries of the Company
and their respective jurisdictions of incorporation or organization and Schedule
3.1(b) sets forth a complete and correct list of each of the other Subsidiaries
of the Company and their respective jurisdictions of incorporation. "Subsidiary"
shall mean with respect to any Person, any corporation or other entity of which
50% or more of the securities or other interests having by their terms ordinary
voting power for the election of directors or others performing similar
functions with respect to such entity is directly or indirectly owned by such
Person. "Person" shall mean any natural person, firm, individual, partnership,
joint venture, business trust, trust, association, corporation, company,
unincorporated entity or Governmental Entity (as defined in Section 3.4(b)).
Section 3.2 Capitalization.
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(a) The authorized capital stock of the Company consists of
50,000,000 shares of Company Common Stock and
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100,000 shares of preferred stock, par value $1.00, of the Company (the "Company
Authorized Preferred Stock"), of which 24,000 shares have been designated as
Series A Preferred Stock. At the close of business on December 18, 1997: (i)
16,852,774 shares of Company Common Stock were issued and outstanding; (ii)
1,761,524 shares of Company Common Stock were issued and held by the Company in
its treasury; (iii) 24,000 shares of Series A Preferred Stock were reserved for
issuance pursuant to the Shareholders' Rights Agreement, dated February 16,
1989, as amended and restated as of March 12, 1990 (the "Rights Agreement");
(iv) 3,564,537 shares of Company Common Stock were reserved for issuance
pursuant to the Company Stock Plans, of which 2,132,200 shares are subject to
outstanding Company Stock Options; and (v) no shares of Company Authorized
Preferred Stock have been designated (except for the 24,000 shares of Series A
Preferred Stock referenced above) or issued. All out standing shares of capital
stock of the Company are, and all shares thereof which may be issued will be,
when issued, duly authorized, validly issued, fully paid and nonassessable and
not subject to preemptive rights. Except as expressly provided in this Agreement
and except for changes since December 18, 1997 resulting from the issuance of
shares of Company Common Stock upon exercise of Company Stock Options granted
prior to the date hereof or pursuant to the Employee Stock Purchase Plan as
contemplated by Section 2.3, (x) there are not issued, reserved for issuance or
outstanding (A) any shares of capital stock or other voting securities of the
Company, (B) any securities of Company or any of its Subsidiaries convertible
into or exchangeable or exercisable for shares of capital stock or voting
securities of the Company, (C) any warrants, calls, options or other rights to
acquire from Company or any of its Subsidiaries, and any obligation of Company
or any of its Subsidiaries to issue, any capital stock, voting securities or
securities convertible into or exchangeable or exercisable for capital stock or
voting securities of the Company, and (y) there are no outstanding obligations
of Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire
any such securities or to issue, deliver or sell, or cause to be issued,
delivered or sold, any such securities, in each case, other than those described
in the second sentence of this Section 3.2(a). Except as set forth in Schedule
3.2(a) of the Disclosure Schedule, there are no existing or outstanding (i)
-
options, warrants, calls, preemptive rights, subscriptions or other rights,
convertible securities, agreements or commitments of any character obligating
the Company or any of its Subsidiaries to issue, transfer or sell any shares of
capital stock or
10
other equity interest in, the Company or any of its Subsidiaries or securities
convertible into or exchangeable for such shares or equity interests, (ii)
contractual obligations--of the Company or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any capital stock of the Company or any
Subsidiary of the Company or (iii) voting trusts or similar agreements to which
---
the Company or any of its Subsidiaries is a party with respect to the voting of
the capital stock of the Company or any of its Subsidiaries. The Company has
delivered to MergerCo prior to the execution of this Agreement a complete and
correct copy of the Rights Agreement (together with the amendment thereof
contemplated by Section 3.23).
(b) Except as set forth in Schedule 3.2(b) of the Disclosure
Schedule, (i) all of the outstanding shares of capital stock (or equivalent
-
equity interests of entities other than corporations) of each of the Company's
Subsidiaries are beneficially owned, directly or indirectly, by the Company
and (ii) neither the Company nor any of its Subsidiaries owns any shares of
--
capital stock or other securities of, or interest in, any other Person (other
than any Subsidiaries listed on Schedule 3.1), or is obligated to make any
capital contribution to or other investment in any other Person, provided that
--------
Schedule 3.2(b) shall not be required to set forth any cash equivalents held by
the Company or any of its Subsidiaries or any Person in which the Company or any
of its Subsidiaries owns less than 100 shares of publicly traded securities.
Section 3.3 Authorization; Validity of Agreement. The Company has the
------------------------------------
requisite corporate power and authority to execute and deliver this Agreement
and, subject to approval of its stockholders as contemplated by Section 5.6
hereof, to consummate the transactions contemplated hereby. The execution,
delivery and performance by the Company of this Agreement and the consummation
of the transactions contemplated hereby have been duly recommended by the
Special Committee of the Board of Directors and duly authorized by the Board of
Directors of the Company and, other than approval and adoption of this Agreement
by the holders of two-thirds of the outstanding shares of Company Common Stock,
no other corporate proceedings on the part of the Company are necessary to
authorize the execution and de livery of this Agreement by the Company and the
consummation of the transactions contemplated hereby. This Agreement has been
duly executed and delivered by the Company and, assuming due authorization,
execution and delivery of this Agreement by MergerCo, is a valid and binding
obligation of
11
the Company in accordance with its terms, except that such enforcement may be
subject to or limited by (i) bankruptcy, insolvency or other similar laws, now
-
or hereafter in effect, affecting creditors' rights generally, and (ii) the
--
effect of general principles of equity (regardless of whether enforceability is
considered in a proceeding at law or in equity).
Section 3.4 No Violations; Consents and Approvals.
-------------------------------------
(a) Neither the execution and delivery of this Agreement by the
Company nor the consummation by the Company of the transactions contemplated
hereby will (i) violate any provision of the Articles of Organization or By-Laws
-
of the Company, (ii) except as set forth in Schedule 3.4(a) of the Disclosure
--
Schedule, conflict with, result in a violation or breach of, or constitute (with
or without due notice or lapse of time or both) a default (or give rise to any
right of termination, amendment, cancellation or acceleration, or to the
imposition of any Lien (as defined in Section 3.18(b))) under, or result in the
acceleration or trigger of any payment, time of payment, vesting or increase in
the amount of any compensation or benefit payable pursuant to, the terms,
conditions or provisions of any note, bond, mortgage, indenture, guarantee or
other evidence of indebtedness, or any lease, license, contract, agreement,
plan or other instrument or obligation, to which the Company or any of its
Subsidiaries is a party or by which any of them or any of their assets may be
bound or (iii) conflict with or violate any federal, state, local or foreign
---
order, writ, injunction, judgment, award, decree, statute, law, rule or
regulation (collectively, "Laws") applicable to the Company, any of its
Subsidiaries or any of their properties or assets; except in the case of clauses
(ii) or (iii) for such conflicts, violations, breaches or defaults which in the
aggregate would not have or result in a Material Adverse Effect or materially
impair or delay the consummation of the transactions contemplated hereby.
(b) Except as disclosed in Schedule 3.4(b) of the Disclosure
Schedule, no filing or registration with, declaration or notification to, or
order, authorization, consent or approval of, any federal, state, local or
foreign court, legislative, executive or regulatory authority or agency (a
"Governmental Entity") or any other Person is required in connection with the
execution, delivery and performance of this Agreement by the Company or the
consummation by the Company of the transactions contemplated hereby, except (i)
-
12
applicable requirements under Competition Laws (as defined in Section 5.4(b)),
(ii) applicable requirements under the Securities Exchange Act of 1934, as
---
amended (the "Exchange Act"), (iii) applicable requirements under the Securities
---
Act of 1933, as amended (the "Securities Act"), (iv) the filing of the Articles
--
of Merger with the Massachusetts Secretary of State and the filing of the
Certificate of Merger with the Delaware Secretary of State, (v) applicable
-
requirements under "blue sky" laws of various states,(vi) such other consents,
--
approvals, orders, authorizations, notifications, registrations, declarations
and filings the failure of which to be obtained or made in the aggregate would
not have or result in a Material Adverse Effect or materially impair or delay
the consummation of the transactions contemplated hereby.
Section 3.5 SEC Reports and Financial Statements. The Company has
------------------------------------
timely filed with the Securities and Exchange Commission (the "SEC"), any
applicable state securities authorities and any other Governmental Entity all
forms and documents required to be filed by it since January 1, 1993
(collectively, the "Company Reports") and has heretofore made available to the
Merger Sub (i) its Annual Reports on Form 10-K for the fiscal years ended March
-
31, 1993, March 31, 1994, March 31, 1995, March 31, 1996 and March 31, 1997,
respectively, (ii) its Quarterly Reports on Form 10-Q for the periods ended June
--
30 and September 30, 1997, (iii) all proxy statements relating to meetings of
---
stockholders of the Company since January 1, 1993 (in the form mailed to
stockholders) and (iv) all other forms, reports and registration statements
--
filed by the Company with the SEC since January 1, 1993 (other than registration
statements on Form S-8 or Form 8-A, filings on Form T-1 or preliminary materials
and registration statements in forms not declared effective). The documents
described in clauses (i)-(iv) above (whether filed before, on or after the date
hereof) are referred to in this Agreement collectively as the "Company SEC
Documents". As of their respective dates, the Company Reports (a) did not
-
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading and (b) complied in all material respects with the applicable
-
requirements of Law, including in the case of SEC filings, the Exchange Act and
the Securities Act, as the case may be, and the applicable rules and regulations
of the SEC thereunder. The consolidated financial statements included in the
Company SEC Documents have been prepared in accordance with United
13
States generally accepted accounting principles ("GAAP") applied on a consistent
basis during the periods involved (except as otherwise noted therein and except
that the quarterly financial statements are subject to year end adjustment and
do not contain all footnote disclosures required by GAAP) and fairly present in
all material respects the consolidated financial position and the consolidated
results of operations and cash flows of the Company and its consolidated
Subsidiaries as at the dates thereof or for the periods presented therein.
Section 3.6 Absence of Certain Changes. Except as disclosed in the
--------------------------
Company SEC Documents filed prior to the date hereof or as disclosed in Schedule
3.6 of the Disclosure Schedule, since September 30, 1997, (i) the Company and
-
its Subsidiaries have conducted their respective operations only in the ordinary
course consistent with past practice, (ii) there has not been a Material Adverse
--
Effect and (iii) the Company and the Subsidiaries have not taken action that if
---
taken after the date hereof would constitute a violation of Section 5.1 (other
than clause (a) thereof).
Section 3.7 Absence of Undisclosed Liabilities. Except as and to the
----------------------------------
extent disclosed (a) in the Company's Annual Report on Form 10-K for the period
-
ended March 31, 1997, including as reflected or reserved against in the balance
sheet dated as of and as at March 31, 1997 constituting a portion of the
financial statements included therein (the "March 31, 1997 Balance Sheet") or in
the notes thereto, (b) in the Company SEC Documents filed prior to the date
-
hereof or (c) in Schedule 3.7 of the Disclosure Schedule, neither the Company
-
nor any of its Subsidiaries had as of that date any liabilities or obligations
(accrued, contingent or otherwise) which would be material to the Company and
its Subsidiaries taken as a whole or which would be required to be set forth in
an audited consolidated balance sheet of the Company and its Subsidiaries as of
that date or the notes thereto prepared in accordance with GAAP.
Section 3.8 Information in Form S-4; Proxy Statement; Exchange Act
------------------------------------------------------
Schedules.
---------
(a) The registration statement on Form S-4 (including the Proxy
Statement (as defined in Section 5.6(a)) contained therein as a prospectus) to
be filed with the SEC by the Company in connection with the issuance of the
Recapitalized Common Stock of the Company following the Merger (the "Form S-4")
at the time or times it is filed with the SEC and at any time it is amended or
supplemented
14
and at the time it becomes effective under the Securities Act, and the
prospectus contained therein, as of its date, (i) will not contain any
-
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading and (ii)
--
will comply in all material respects with the provisions of the Securities Act
and the rules and regulations thereunder; except that no representation is made
by the Company with respect to statements made in the Form S-4 based on
information supplied by MergerCo specifically for inclusion in the Form S-4.
(b) The Proxy Statement (and any amendment thereof or supplement
thereto) at the date mailed to Company stockholders and at the time of the
Special Meeting (as defined in Section 5.6(b)), (i) will not contain any untrue
-
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading and (ii) will comply
--
in all material respects with the provisions of the Exchange Act and the rules
and regulations thereunder; except that no representation is made by the Company
with respect to statements made in the Proxy Statement based on information
supplied by MergerCo specifically for inclusion in the Proxy Statement.
(c) Any Schedule 14A or 13E-3 and any related schedules (and any
amendment or supplement to any of the foregoing) filed with the SEC at the date
so filed (i) will not contain any untrue statement of a material fact or omit to
-
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading and (ii) will comply in all material respects with the
--
provisions of the Exchange Act and the rules and regulations thereunder; except
that no representation is made by the Company with respect to statements made in
any such document based on information supplied by MergerCo specifically for
inclusion therein.
Section 3.9 Employee Benefit Plans; ERISA.
-----------------------------
(a) No material liability under Title I or IV of ERISA or the penalty
or excise tax provisions of the Code relating to employee plans (or equivalent
legislation of a foreign jurisdiction) has been incurred by the Company or
15
any of its Subsidiaries and, to the Company's best knowledge, no condition
exists or event has occurred that presents a risk to the Company or any of its
Subsidiaries of incurring any such material liability.
(b) Each bonus, incentive or deferred compensation, stock option or
other equity based, severance, termination, change in control, retention,
employment, medical, life, disability, other welfare, profit-sharing, retirement
or other material compensation or benefit plan, agreement or policy in respect
of which the Company or any of its Subsidiaries has any material liability has
been filed with the Company SEC Documents or is listed on Schedule 3.9(b) of the
Disclosure Schedule (collectively, the "Plans"). No such Plan is subject to
section 302 of ERISA or section 412 of the Code and no such Plan has incurred
any "accumulated funding deficiency" (as defined in section 302 of ERISA or
section 412 of the Code), whether or not waived. Each such Plan that is intended
to be "qualified" within the meaning of section 401(a) of the Code has received
a determination letter from the Internal Revenue Service confirming its
qualified status and no condition exists or event has occurred since the date of
such determination letter that would adversely affect the qualified status of
any such Plan. Each Plan has been operated and administered in all respects in
substantial compliance with its terms and applicable Law, including but not
limited to ERISA, the Code and equivalent applicable legislation of a foreign
jurisdiction. There are no pending, or to the best knowledge of the Company,
threatened claims by or on behalf of any Plan, by any employee or beneficiary or
otherwise involving any such Plan or the assets thereof, except for claims the
resolution of which would not individually or in the aggregate have or result in
a material liability to the Company or a Subsidiary.
(c) Assuming that no amount is paid to any employee listed on
Schedule 3.9(c)(i) as a severance benefit with respect to a termination of
employment, no payment, benefit or other amount paid, payable or required to be
paid in respect of any employee will fail to be deductible under section 280G of
the Code. Except as provided in Section 2.3 hereof or as set forth on Schedule
3.9(c)(ii) of the Disclosure Schedule, (i) no current or former employee or
-
director of the Company or any Subsidiary is or will become entitled to any
additional or new compensation, benefits or other compensatory payment or an
increase in the amount of any compensation, benefits or other compensatory
payment in connection with or as a result of the consummation of the
16
transactions contemplated by this Agreement and (ii) neither the vesting nor the
--
timing of the payment of any such compensation, benefit or other compensatory
payment in respect of any such employee or director has been or will be
accelerated in connection with or as a result of the consummation of the
transactions contemplated by this Agreement.
Section 3.10 Litigation; Compliance with Law.
-------------------------------
(a) Except as disclosed in the Company SEC Documents filed prior to
the date hereof or in Schedule 3.10(a) of the Disclosure Schedule, (i) there is
-
no suit, claim, action, arbitration, proceeding or investigation or other
Litigation (as defined below) pending or, to the knowledge of the Company,
threatened, against the Company or any of its Subsidiaries or any of their
properties or assets which, individually or in the aggregate, if determined
adversely to the Company or any such Subsidiary, would have or result in a
Material Adverse Effect, and (ii) neither the Company nor any of its
--
Subsidiaries is subject to any settlement or similar agreement with any
Governmental Entity, or to any order, judgment, decree, injunction or award of
any Governmental Entity or arbitrator, that individually or in the aggregate,
would have or result in a Material Adverse Effect. "Litigation" means any
action, cause of action, claim, demand, suit, proceeding, citation, summons,
subpoena, inquiry or investigation of any nature, civil, criminal, regulatory or
otherwise, in law or in equity, by or before any court, tribunal, arbitrator or
other Governmental Entity.
(b) Except as disclosed in the Company SEC Documents filed prior to
the date hereof, the operations of the Company and its Subsidiaries have not
been and are not being conducted, and no Real Property (as defined in Section
3.19) is, in violation of any law, statute or regulation, any judgment, decree,
order or injunction of any Governmental Entity, any other Law, or any Permit (as
defined below), except where such violations in the aggregate would not have or
result in a Material Adverse Effect. Except as set forth in Schedule 3.10(b) of
the Disclosure Schedule, neither the Company nor any of its Subsidiaries has
received any notice, or has knowledge of any claim, alleging any such violation.
(c) The Company and its Subsidiaries hold all licenses, permits,
variances, consents, authorizations, waivers, grants, franchises, concessions,
exemptions, orders, registrations and approvals of Governmental Entities
17
or other Persons necessary for the ownership, leasing, operation, occupancy and
use of the Real Property and the conduct of their respective businesses as
currently conducted ("Permits"), except where the failure to hold such Permits
in the aggregate would not have or result in a Material Adverse Effect. There is
no Litigation pending or, to the knowledge of the Company, threatened, that
would result in the termination, modification or nonrenewal of any Permit, and
neither the Company nor any of its Subsidiaries has received notice that any
Permit will be terminated or modified or cannot be renewed in the ordinary
course of business, and there is no reasonable basis for any such termination,
modification or nonrenewal, except for such terminations, modifications or
nonrenewals as in the aggregate would not have or result in a Material Adverse
Effect. The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby do not and will not
violate any Permit, or result in any termination, modification or nonrenewal
thereof, except for such violations terminations, modifications or nonrenewals
thereof as in the aggregate would not have or result in a Material Adverse
Effect.
Section 3.11 Intellectual Property. (a) The Company and its
---------------------
Subsidiaries own (beneficially and as of record), or possess valid and legally
enforceable licenses or rights to use, any and all United States and foreign
patents, patent applications, patent disclosures, mask works, software,
trademarks, trade names, copyrights and service marks, including applications to
register and registrations for any of the foregoing, as well as trade secrets,
know-how and other proprietary rights and information (collectively,
"Intellectual Property") necessary for the conduct of, or otherwise material to,
their business and operations as currently conducted or as proposed to be
conducted (the "Company Intellectual Property"), free and clear of any Liens
(except for any Permitted Liens, as defined in Section 3.18(b)). Except as
disclosed in Schedule 3.11 of the Disclosure Schedule, the conduct of the
business of the Company and its Subsidiaries as currently conducted does not
infringe or conflict with any Intellectual Property of any Person; and neither
the Company nor any of its Subsidiaries has received notice or has actual
knowledge of any such current infringement or conflict except where such
infringements and conflicts as in the aggregate would not have or result in a
Material Adverse Effect. All of the patents, patent applications and patent
disclosures included in Company Intellectual Property are valid, subsisting and
enforceable. To the knowledge of the
18
Company, no Person is infringing or allegedly infringing any Intellectual
Property of the Company or its Subsidiaries except where such actual and alleged
infringements as in the aggregate would not have or result in a Material Adverse
Effect. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby will not result in the loss of, or creation of
any Lien on, the rights of the Company or any Subsidiary with respect to the
Intellectual Property owned or used by them, except where such losses and such
Liens as in the aggregate would not have or result in a Material Adverse Effect.
Schedule 3.11 of the Disclosure Schedule contains a complete and correct list of
all patents, patent applications, patent disclosures, mask works, software
(other than any software that is commercially available for an amount less than
$50,000), trademarks, trade names, registered copyrights and service marks,
including applications to register and registrations for any of the foregoing,
included in Company Intellectual Property except that Schedule 3.11 need not
disclose any trademarks, trade names or service marks that are not (a)
-
registered or applied for and (b) not material to the business of the Company or
-
any of its Subsidiaries as currently conducted. Except as disclosed in Schedule
3.11 of the Disclosure Schedule, all software used by the Company or any of its
Subsidiaries, or sold, licensed or otherwise made available to any other Person
by the Company or any of its Subsidiaries, that in each case, contains or calls
on a calendar function, including but not limited to any function that is
indexed to a computer processing unit clock, provides specific dates or
calculates spans of dates, is and will be able to record, store, process and
provide true and accurate dates and calculations for dates and spans of dates
including and following January 1, 2000.
Section 3.12 Contracts. (a) Other than the contracts or agreements
---------
of the Company listed as exhibits to the Company's Annual Report on Form 10-K
for the year ended March 31, 1997 (the "Material Contracts"), Schedule 3.12(a)
of the Disclosure Schedule sets forth a complete and correct list of each of the
following contracts, commitments and agreements to which the Company or any of
its Subsidiaries is a party or by which any of them is bound (the contracts,
commitments and agreements of the types described below that are scheduled or
required to be scheduled, collectively, the "Identified Contracts"), in each
case, as such Identified Contract is in effect on the date hereof:
19
(i) contracts, commitments and agreements governing the terms of
indebtedness for borrowed money, or guarantees of indebtedness, of, or
secured by assets of, the Company or any of its Subsidiaries;
(ii) shareholder, voting trust or similar contracts and agreements
relating to the voting of shares or other equity or debt interests of the
Company or any of its Subsidiaries;
(iii) contracts, commitments and agreements entered into since 1994
providing for the acquisition or disposition of assets having a value in
excess of $500,000, other than sales of inventories in the ordinary course
of business and sales of obsolete equipment;
(iv) leases, subleases and licenses or real property, occupancy, use
and other agreements relating to or constituting real property, each with a
term of one year or more and an annual payment obligation in excess of
$500,000;
(v) (a) joint venture agreements, partnership agreements and other
-
similar contracts, commitments and agreements involving a sharing of
profits and expenses; contracts, commitments and agreements providing for a
"strategic alliance" or "preferred vendor" relationship; or (b) contracts,
-
commitments or agreements with distributors, brokers or sales agents
except, in the case of (b), only to the extent that any such distributors,
brokers or sales agents are responsible for revenues to the Company or any
of its Subsidiaries in excess of $500,000 per year;
(vi) contracts, commitments and agreements governing the terms of
indebtedness (other than trade payables in the ordinary course of
business) of third parties to the Company or by any of its Subsidiaries,
or guarantees by the Company or any of its Subsidiaries of indebtedness of
third parties;
(vii) contracts, commitments and agreements prohibiting or materially
restricting the ability of the Company or any of its Subsidiaries to
conduct its business, to engage in any business or operate in any
geographical area or to compete with any Person;
20
(viii) contracts, commitments and agreements with "change of control"
provisions except to the extent that if a "change of control" event
occurred, it would not result in a termination or other alteration of such
contract, commitment or agreement that would have or would reasonably be
expected to have a material adverse effect on the business of the Company
or its Subsidiary that is a party thereto;
(ix) contracts, commitments, and agreements with any federal or
state Governmental Entity;
(x) exchange-traded or over-the-counter swap, forward, future,
option, cap floor or collar financial contract, or interest rate or foreign
currency protection contract, other than those listed in the financial
statements contained in the Company SEC Documents;
(xi) licenses, licensing arrangements and other contracts and
agreements either (x) providing, in whole or in part, for the use of, or
-
limiting the use of, any Intellectual Property or (y) relating to the
-
development, support or maintenance of any Intellectual Property (in each
case, that is material to the business of the Company or any of its
Subsidiaries that is a party thereto and other than relating to software
that is commercially available for less than $50,000); and
(xii) contracts and agreements that are or will be material to the
business, operations, results of operations, condition (financial or
otherwise), assets or properties of the Company and its Subsidiaries
involving amounts in excess of $250,000.
(b) Each of the Identified Contracts and Material Contracts is in
full force and effect, and neither the Company nor any of its Subsidiaries, nor,
to the knowledge of the Company, any other Person, is in breach of, or default
under, any such contract, commitment or agreement, and no event has occurred
that with notice or passage of time or both would constitute such a breach or
default thereunder by the Company or any of its Subsidiaries, or, to the
knowledge of the Company, any other Person, except for such failures to be in
full force and effect and such conflicts, violations, breaches or defaults as in
the aggregate would not have or result in a Material Adverse
21
Effect or materially delay the consummation of the transactions contemplated
hereby.
Section 3.13 Taxes.
-----
(a) Except as disclosed in Section 3.13 of the Disclosure Schedule:
(i) each of the Company, its Subsidiaries, and any Consolidated Group (as
-
defined below) has timely filed all material Tax Returns (as defined below)
required to be filed by it and has paid all Taxes (as defined below) shown
thereon to be owing, and each of the Company and its Subsidiaries has provided
reserves in accordance with GAAP in its most recent financial statements
included in the Company SEC Documents for any Taxes (as defined below) that have
not been paid for the periods covered by such financial statements; (ii) none of
--
the Company or its Subsidiaries has granted any extension or waiver of the
statute of limitations period applicable to any material Tax Return, which
period (after giving effect to such extension or waiver) has not expired; (iii)
---
all Tax periods of each of the Company and its Subsidiaries, and any
Consolidated Group, through and including March 31, 199_ are closed or no longer
subject to audit; (iv) no audits or other administrative proceedings or court
--
proceedings are presently pending with regard to any Taxes or Tax Return of any
of the Company, its Subsidiaries or any Consolidated Group as to which any
taxing authority has asserted in writing any claim which, if adversely
determined, individually or in the aggregate would have or result in a Material
Adverse Effect; and (v) none of the Company or any of its Subsidiaries has
-
received any notice of deficiency or assessment from any taxing authority with
respect to liabilities for income or any material other Taxes which has not been
fully paid or finally settled.
(b) "Consolidated Group" shall mean any consolidated, combined,
unitary or aggregate group for Tax purposes of which the Company or any of its
Subsidiaries is a member. "Taxes" shall mean all federal, state, local and
foreign taxes, and other assessments of a similar nature (whether imposed
directly or through withholding), including interest and penalties, and
additions thereto. "Tax Returns" shall mean all federal, state, local and
foreign tax returns, declarations, statements, reports, schedules, forms and
information returns, and any amendments to any of the foregoing, relating to
Taxes.
22
Section 3.14 Environmental Matters.
---------------------
(a) Each of the Company and its Subsidiaries has complied and is in
compliance in all respects with all applicable Environmental Laws (as defined
below) pertaining to any of the properties and assets of the Company or any of
its Subsidiaries (including the Real Property and the properties currently or
formerly owned or leased) and the use and ownership thereof, and to their
businesses and operations. No violation by the Company or any of its
Subsidiaries is being alleged or has been alleged of any applicable
Environmental Law relating to any of their respective properties and assets
including (the Real Property and the properties currently or formerly owned or
leased) or the use or ownership thereof, or to their respective businesses and
operations.
(b) Neither the Company nor any of its Subsidiaries nor any other
Person (including any tenant or subtenant) has caused or taken any action that
will result in, and neither the Company nor any of its Subsidiaries is subject
to, any liability or obligation on the part of the Company or any of its
Subsidiaries relating to (x) the environmental conditions on, under, or about
-
the Real Property or other properties or assets currently or formerly owned,
leased, operated or used by the Company or any of its Subsidiaries or any
predecessor thereto at the present time or in the past, including without
limitation, the air, soil and groundwater conditions at such properties or (y)
-
the past or present use, management, handling, transport, treatment,
generation, storage, disposal, discharge, leak, emission, or other manner of
release of any Hazardous Materials (as defined below).
(c) The Company has disclosed and made available to MergerCo all
information, including, without limitation, all studies, analyses and test
results, in the possession, custody or control of or otherwise known to the
Company or any of its Subsidiaries relating to (x) the environmental conditions
-
on, under or about the Real Property or other properties or assets currently or
formerly owned, leased, operated or used by the Company or any of its
Subsidiaries or any predecessor in interest thereto at the present time or in
the past, and (y) any Hazardous Materials used, managed, handled, transported,
-
treated, generated, stored, discharged, leaked, emitted, or otherwise released
by the Company or any of its Subsidiaries or any other Person on, under, about
or from any of the Real Property and the properties currently or formerly owned
or leased, or
23
otherwise in connection with the use or operation of any of the properties and
assets of the Company or any of its Subsidiaries, or their respective businesses
and operations. Except as disclosed in Schedule 3.14(c), none of the current or
past operations of the Company or any of its Subsidiaries, or any by-product
thereof, and none of the currently or formerly owned or leased property or
assets of the Company or any of its Subsidiaries, including without limitation
the Real Property, is related to or subject to any Litigation related to any
Environmental Law.
(d) "Environmental Law" means any foreign, federal, state or local
law, regulation, rule, ordinance or case law relating to pollution or protection
of human health and safety or the environment, including, but not limited to,
laws relating to releases or threatened releases of Hazardous Materials into the
environment and including laws pertaining to the protection of the health and
safety of employees. "Hazardous Materials" means any substance or material that
is classified or regulated as "hazardous" or "toxic" pursuant to any
Environmental Law, including without limitation, asbestos, polychlorinated
biphenyls and petroleum.
Section 3.15 Required Vote by Company Stockholders. The affirmative
-------------------------------------
vote of the holders of two-thirds of the outstanding Shares entitled to vote
hereon is the only vote of any class of capital stock of the Company required by
the MBCL, the Articles of Organization or the By-Laws of the Company to adopt
this Agreement and approve the transactions contemplated hereby.
Section 3.16 Brokers. Except for Xxxxxxx Xxxxx & Co., Inc., a
-------
complete and accurate copy of the engagement letter of which has been provided
to MergerCo, no broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company or any of its Subsidiaries, that is or will be payable
by the Company or any of its Subsidiaries.
Section 3.17 Opinions of Financial Advisors. The Company has
------------------------------
received from Xxxxxxx Xxxxx & Co., Inc., and provided to MergerCo on or prior to
the date hereof, an executed copy of its opinion that the Merger Consideration
to be received by the holders of Shares in the Merger is fair, from a financial
point of view, to such holders. The Company has been authorized by the Financial
Advisor to
24
include the Fairness Opinion in the Proxy Statement and has not been notified by
the Financial Advisor that the Fairness Opinion has been withdrawn or modified.
Section 3.18 Assets.
------
(a) The Company and its Subsidiaries own, or otherwise have
sufficient and legally enforceable rights to use, all of the properties and
assets (real, personal or mixed, tangible or intangible), reasonably necessary
for the conduct of, or otherwise material to, their business and operations (the
"Assets"). The Company and its Subsidiaries have good, valid and marketable
title to, or in the case of leased property have good and valid leasehold
interests in, all Assets, including but not limited to all such Assets reflected
in the balance sheet dated as of September 30, 1997, constituting a portion of
the Company's Quarterly Report on Form 10-Q for the period ended September 30,
1997 (the "September 30, 1997 Balance Sheet") or acquired since the date thereof
(except as may have been disposed of in the ordinary course of business
consistent with past practices prior to the date hereof or in accordance
herewith), in each case free and clear of any Lien (as defined below), except
Permitted Liens (as defined below). All tangible Assets are reasonably adequate
and suitable for the purposes for which they are presently being used. Schedule
3.18(a) of the Disclosure Schedule sets forth a complete and correct list of
each of the countries in which Assets are located.
(b) "Lien" means any mortgage, pledge, deed of trust, hypothecation,
right of others, claim, security interest, encumbrance, burden, title defect,
title retention agreement, lease, sublease, license, occupancy agreement,
easement, covenant, condition, encroachment, voting trust agreement, interest,
option, right of first offer, negotiation or refusal, proxy, lien, charge or
other restrictions of any nature whatsoever. "Permitted Liens" means (a) Liens
-
reserved against in the September 30, 1997 Balance Sheet, to the extent so
reserved, (b) Liens for Taxes not yet due and payable or that are being
-
contested in good faith by appropriate proceedings and for which adequate
reserves have been provided in accordance with GAAP or that are statutory Liens
for Taxes not yet delinquent, (c) those Liens that are set forth in Schedule
-
3.18(b) of the Disclosure Schedule and (d) those Liens that, in the aggregate
-
with all other Permitted Liens, do not and will not materially detract from the
value of the properties and assets of any of the Company and its Subsidiaries
materially interfere with the present
25
use of any thereof or otherwise have a Material Adverse Effect.
Section 3.19 Real Property. There is no Owned Real Property (as
-------------
defined below). Schedule 3.19(a)(i) contains a complete and correct list of each
parcel of Formerly Owned Property (as defined below) setting forth the street
address, current owner, date of disposition to the current owner, and the legal
description of each parcel of Formerly Owned Property. Schedule 3.19(a)(ii) of
the Disclosure Schedule contains a complete and correct list of all Leases (as
defined below) setting forth the address, tenant for each Lease and the
documents of which each Lease is comprised. No material damage or destruction
has occurred since March 31, 1997 with respect to any of the Company Real
Property. "Company Real Property" means the Owned Real Property and the Leased
Real Property. "Formerly Owned Property" means any Real Property previously
owned by the Company or any of its Subsidiaries since 1990, but not owned by the
Company or any of its Subsidiaries as of the date of this Agreement. "Leases"
means the leases, subleases, licenses and use or occupancy agreements pursuant
to which the Company or any of its Subsidiaries is the lessee, sublessee,
licensee, user or occupant of Real Property. "Leased Real Property" means all
interests in Real Property pursuant to the Leases. "Owned Real Property" means
the real property owned by the Company and its Subsidiaries. "Real Property"
means real property and structures, facilities and improvements located thereon
or attached or appurtenant thereto and all easements, licenses, rights and
appurtenances relating to the foregoing.
Section 3.20 Insurance. Schedule 3.20 of the Disclosure Schedule
---------
contains a complete and correct list and summary description of all insurance
policies maintained at present or at any time during the past three calendar
years by or on behalf of any of the Company and its Subsidiaries. Such policies
are in full force and effect, and all premiums due thereon have been paid. The
Company and its Subsidiaries have complied in all material respects with the
terms and provisions of such policies. The insurance coverage provided by such
policies is adequate and suitable for the business and operations of the Company
and its Subsidiaries, and is on such terms (including without limitation as to
deductibles and self-insured retentions), covers such risks, contains such
deductibles and retentions, and is in such amounts, as the insurance customarily
carried by comparable companies of established reputation similarly situated and
carrying on the same or similar business and operations.
26
Section 3.21 Labor Matters, etc. Neither the Company nor any of its
------------------
Subsidiaries is a party to or bound by and none of their respective employees is
subject to any collective bargaining agreement, memorandum of understanding or
other written document relating to the terms and conditions of employment for
any group of employees (any such agreement, memorandum or document, a
"Collective Bargaining Agreement"), and there are no labor unions or other
organizations representing or purporting or attempting to represent any
employees employed by any of the Company and its Subsidiaries. The Company and
its Subsidiaries have complied with all applicable Laws pertaining to the
employment or termination of employment of their respective employees,
including, without limitation, all such Laws relating to labor relations, equal
employment opportunities, fair employment practices, prohibited discrimination
or distinction and other similar employment activities, except for any failures
so to comply that individually or in the aggregate would not have or result in a
Material Adverse Effect.
Section 3.22 Disclosure. To the actual knowledge of the Company,
----------
this Agreement and each certificate or other instrument or document furnished by
or on behalf of the Company to MergerCo pursuant hereto, taken as a whole, do
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated herein or therein or necessary to make the statements
contained herein or therein in light of the circumstances under which they were
made, not misleading.
Section 3.23 Rights Agreement. The Board of Directors of the Company
----------------
has contemporaneously with the execution of this Agreement amended the Rights
Agreement so that (i) none of CD&R, Fund or MergerCo will become an "Acquiring
Person" as a result of the consummation of the transactions contemplated by this
Agreement, (ii) no "Stock Acquisition Date", "Triggering Event" or "Distribution
Date" (as such terms are defined in the Rights Agreement) will have occurred as
a result of the consummation of the transactions contemplated by this Agreement,
and (iii) all outstanding Rights issued and outstanding under the Rights
Agreement and the Rights Agreement will terminate immediately prior to the
Effective Time and no shares of Recapitalized Common Stock issued on or after
the Effective Time will have any Rights associated with them under the Rights
Agreement.
Section 3.24 Takeover Statutes. No "Fair price," "Moratorium,"
-----------------
"control share acquisition" or other similar
27
anti-takeover statute or regulation enacted under state or federal laws in the
United States (each, a "Takeover Statute") including, without limitation,
Chapters 110C, 110D and 110F of the Massachusetts General Laws, applicable to
the Company or any of its Subsidiaries is applicable to the execution, delivery
and performance of this Agreement or the consummation of the Merger or the other
transactions contemplated by this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF MERGERCO
MergerCo represents and warrants to the Company as of the date hereof
and as of the Closing Date as follows:
Section 4.1 Organization. MergerCo is a corporation duly
------------
organized, validly existing and in good standing under the laws of Delaware.
MergerCo has all requisite corporate power and authority to own, lease, operate
or use its properties and to carry on its business as now being conducted and is
qualified or licensed to do business and is in good standing in each
jurisdiction in which it owns real property or in which the nature of the
business conducted by it makes such qualification or licensing necessary.
MergerCo is not in breach of its certificate of incorporation or by-laws.
MergerCo has previously delivered to the Company complete and correct copies of
the certificate of incorporation and by-laws of MergerCo, as currently in
effect.
Section 4.2 Authorization; Validity of Agreement.
------------------------------------
(a) MergerCo has the requisite corporate power and authority to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby. The execution, delivery and performance by MergerCo of this Agreement
and the consummation by MergerCo of the transactions contemplated hereby have
been duly authorized by its Board of Directors and, other than the approval and
adoption of this Agreement by the stockholders of MergerCo, no other corporate
proceedings on the part of MergerCo are necessary to authorize the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby. This Agreement has been duly executed and delivered by MergerCo and,
assuming due authorization, execution and delivery of this Agreement by the
Company, is
28
a valid and binding obligation of MergerCo enforceable against it in
accordance with its terms, except that such enforcement may be subject to or
limited by (i) bankruptcy, insolvency or other similar laws, now or hereafter in
-
effect, affecting creditors rights generally, and (ii) the effect of general
--
principles of equity (regardless of whether enforceability is considered in a
proceeding at law or in equity).
(b) MergerCo has previously delivered to the Company a letter from
Fund, addressed to the Company, confirming Fund's agreement to vote to approve
and adopt this Agreement, in its capacity as a stockholder of MergerCo, upon its
purchase of MergerCo Common Stock.
Section 4.3 Consents and Approvals; No Violations.
-------------------------------------
(a) Neither the execution and delivery of this Agreement by MergerCo
nor the consummation by MergerCo of the transactions contemplated hereby will
(i) violate any provision of the certificate of incorporation or by-laws of
-
MergerCo, (ii) conflict with, result in a violation or breach of, or constitute
--
(with or without due notice or lapse of time or both) a default (or give rise to
any right of termination, amendment, cancellation or acceleration) under, any of
the terms, conditions or provisions of any note, bond, mortgage, indenture,
guarantee, other evidence of indebtedness, license, or any material lease,
contract, agreement or other instrument or obligation, to which MergerCo or any
of its Subsidiaries is a party or by which any of them or any of their assets
may be bound or (iii) conflict with or violate any Laws applicable to MergerCo,
---
any of its Subsidiaries or any of their properties or assets; except in the case
of clauses (ii) and (iii) for such conflicts, violations, breaches or defaults
which in the aggregate would not have a material adverse effect on the business,
assets, liabilities, results of operations or financial or other condition of
MergerCo and its Subsidiaries, taken as a whole, or materially impair or delay
the consummation of the transactions contemplated by this Agreement.
(b) Except as set forth in Schedule 4.3(b) of the disclosure schedule
delivered by MergerCo to the Company on or prior to the date hereof (the
"MergerCo Disclosure Schedule") and assuming that the representation and
warranty of the Company set forth in Section 3.4(b) is true and correct, no
filing or registration with, declaration or no-
29
tification to, or order, authorization, consent or approval of, any Governmental
Entity is required in connection with the execution and delivery of this
Agreement by MergerCo or the consummation by MergerCo of the transactions
contemplated hereby, except (i) applicable requirements under Competition
-
Laws (as defined in Section 5.4(b)), (ii) applicable requirements under the
--
Exchange Act, (iii) applicable requirements under the Securities Act, (iv) the
--- --
filing of the Articles of Merger with the Massachusetts Secretary of State and
the filing of the Certificate of Merger with the Delaware Secretary of State,
(v) applicable requirements under "blue sky" laws of various states, (vi)
- --
applicable requirements under Environmental Laws and (vii) such other consents,
---
approvals, orders, authorizations, notifications, registrations, declarations
and filings (x) required to be obtained or made by the Company or any of its
-
Subsidiaries or (y) the failure of which to be obtained or made would not have a
-
material adverse effect on the business, assets, liabilities, results of
operations or financial or other condition of MergerCo and its Subsidiaries,
taken as a whole, or materially impair or delay the consummation of the
transactions contemplated by this Agreement.
Section 4.4 Information in Form S-4; Proxy Statement; Exchange Act
------------------------------------------------------
Schedules.
---------
(a) None of the information supplied in writing by MergerCo
specifically for inclusion in the Form S-4 will, at the time or times the Form
S-4 is filed with the SEC and at any time it is amended or supplemented and at
the time it becomes effective under the Securities Act, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading.
(b) None of the information supplied in writing by MergerCo
specifically for inclusion in the Proxy Statement (including any amendments or
supplements thereto) will, at the date mailed to stockholders and at the time of
the Special Meeting, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading.
(c) None of the information supplied in writing by MergerCo
specifically for inclusion in any Schedule 14A
30
or 13E-3 (and any amendment or supplement to any of the foregoing) will, at the
date such documents are filed with the SEC, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
Section 4.5 Financing. MergerCo has received and delivered to the
---------
Company (i) a commitment letter from Credit Suisse First Boston and X.X. Xxxxxx
-
Securities, Inc. and Xxxxxx Guaranty Trust Company of New York, addressed to
MergerCo, whereby such financial institutions have committed, upon the terms and
subject to the conditions set forth therein, to provide debt financing to the
Company in the amount of $370 million, and (ii) a letter from Credit Suisse
--
First Boston and/or X.X. Xxxxxx Securities, Inc., addressed to MergerCo,
expressing confidence in its ability to place an additional $275 million in debt
financing for the Company, in each case, as in effect on the date hereof.
MergerCo has received, and delivered to the Company a letter, as in effect on
the date hereof, from the Fund, whereby the Fund has committed, upon the terms
and subject to the conditions set forth therein, to provide equity financing to
MergerCo up to $277 million.
Section 4.6 Beneficial Ownership of Shares. MergerCo does not
------------------------------
"beneficially own" (as defined in Rule 13d-3 under the Exchange Act) more than
l% of the outstanding shares of Company Common Stock or any securities
convertible into or exchangeable for Company Common Stock.
Section 4.7 Brokers. Except as otherwise previously disclosed by
-------
MergerCo to the Company in writing and except for Credit Suisse First Boston and
X.X. Xxxxxx Securities Inc. and Xxxxxx Guaranty Trust Company of New York, who
will provide financing in connection with the transactions contemplated by this
Agreement, no broker, finder or investment banker is entitled to any brokerage,
finder's or other fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
MergerCo, that is or will be payable by the Company or any of its Subsidiaries.
Section 4.8 Formation of MergerCo; No Prior Activities. MergerCo was
------------------------------------------
formed solely for the purpose of engaging in the transactions contemplated by
this Agreement. As of the date hereof and the Effective Time, except for (i)
obligations or liabilities incurred in connection with its
31
incorporation or organization and the transactions contemplated by this
Agreement, (ii) this Agreement and any other agreements or arrangements
contemplated by this Agreement or in furtherance of the transactions
contemplated hereby and (iii) the contribution by certain members of the
Company's management, immediately prior to the Effective Time, of certain shares
of Company Common Stock owned by them in exchange for shares of MergerCo Common
Stock, MergerCo has not incurred, directly or indirectly, through any subsidiary
or affiliate, any obligations or liabilities or engaged in any business
activities of any type or kind whatsoever or entered into any agreements or
arrangements with any Person.
ARTICLE V
COVENANTS
Section 5.1 Interim Operations of the Company. The Company covenants
---------------------------------
and agrees that, except as (i) required by this Agreement, (ii) required by
- --
applicable law, (iii) required by any Material Contract or Identified Contract
---
or by any Plan disclosed on Schedule 3.9(b), in each case to the extent such
requirement is specifically described on Schedule 5.1(iii) or (iv) agreed to in
--
writing by MergerCo, after the date hereof and prior to the Effective Time:
(a) the business of the Company and its Subsidiaries shall be
conducted only in the ordinary course consistent with past practice and, to the
extent consistent therewith, each of the Company and its Subsidiaries shall use
its reasonable efforts to preserve its business organization and the business
organization of its Subsidiaries intact and maintain existing relations with
customers, suppliers, employees and creditors;
(b) the Company shall not amend its Articles of Organization or By-
Laws;
(c) the Company shall not declare, set aside or pay any dividend or
other distribution payable in cash, stock or property with respect to its
capital stock (except for cash dividends on Company Common Stock in the ordinary
course of business consistent with past practice); and neither the Company nor
any of its Subsidiaries shall (i) issue, sell, grant, transfer, pledge, dispose
-
of or encumber any additional shares of, or securities convertible
32
into or exchangeable for, or options, warrants, calls, commitments or rights of
any kind to acquire, any shares of capital stock of any class of the Company or
any of its Subsidiaries (except pursuant to the exercise of stock options
outstanding on the date hereof and stock issuable under the Employee Stock
Purchase Plan to the extent contemplated by this Agreement); (ii) incur any long
--
term indebtedness (whether evidenced by a note or other instrument, pursuant to
a financing lease, sale-leaseback transaction, or otherwise) or incur short-term
indebtedness other than under lines of credit existing on the date hereof,
except for borrowings under existing credit facilities or lines of credit in the
ordinary course of business consistent with past practice; (iii) redeem,
---
purchase or otherwise acquire directly or indirectly any of its capital stock or
other securities; or (iv) enter into or amend in any material respect any Lease
, Material Contract or Identified Contract;
(d) neither the Company nor any of its Subsidiaries shall (i)
-
except for normal salary increases in the ordinary course of business consistent
with past practice, grant any increase in the compensation or benefits payable
or to become payable by the Company or any of its Subsidiaries to any officer or
other management employee of the Company or any Subsidiary; (ii) adopt, enter
--
into or amend or increase, or accelerate the payment or vesting of the amounts,
benefits or rights payable or accrued or to become payable or accrued under, any
bonus, incentive or deferred compensation, severance, termination, change in
control, retention, stock option or other equity based or other material
employee compensation or benefit plan, agreement or policy, provided that the
--------
Employee Stock Purchase Plan shall be (A) amended simultaneously with the
-
execution of this Agreement to preclude (1) any increases after the date hereof
in the rate of payroll deduction contributions that may be made thereunder and
(2) any employees who are not participating under such Employee Stock Purchase
Plan as of the date hereof to become participants thereunder and (B) subject to
-
Section 2.3, terminated effective as of March 31, 1998; or (iii) enter into or
---
amend in any material respect any employment, severance, retention or collective
bargaining agreement or, except in accordance with the existing written policies
of the Company or existing contracts or agreements, grant any severance or
termination pay to any officer, director or employee of the Company or any of
its Subsidiaries;
33
(e) neither the Company nor its Subsidiaries shall change the
accounting principles used by it unless required by GAAP (or, if applicable with
respect to Subsidiaries, foreign generally accepted accounting principles);
(f) neither the Company nor any of its Subsidiaries shall acquire
or agree to acquire, by merging or consolidating with, by purchasing an equity
interest in or a portion of the assets of, or by any other manner, any business
or any corporation, partnership, association or other business organization or
division thereof, or otherwise acquire or agree to acquire any assets of any
other Person (other than the purchase of assets in the ordinary course of
business consistent with past practice);
(g) neither the Company nor any of its Subsidiaries shall sell,
lease, exchange, mortgage, pledge, trans transfer or otherwise dispose of, or
agree to sell, lease, exchange, mortgage, pledge, transfer or otherwise dispose
of, any of its Assets, except in the ordinary course of business consistent with
past practice;
(h) neither the Company nor its Subsidiaries shall enter into any
material arrangement, agreement or contract, or any material amendment,
supplement, waiver or other modification in respect of any existing arrangement,
agreement or contract, with any third party (other than customers in the
ordinary course of business) that provides for an exclusive arrangement with
that third party or is substantially more restrictive on the Company or its
Subsidiaries or substantially less advantageous to the Company or its
Subsidiaries than arrangements, agreements or contracts existing on the date
hereof; and
(i) neither the Company nor any of its Subsidiaries shall compromise,
settle, grant any waiver or release relating to or otherwise adjust any
Litigation, except in the ordinary course of business consistent with past
practice, or involving a payment not in excess of $250,000, and following prior
notice to and consultation with MergerCo;
(j) neither the Company nor any of its Subsidiaries shall make any
material Tax election, amend any Tax Return or settle or compromise any material
federal, state, local or foreign Tax liability; and
34
(k) neither the Company nor any of its Subsidiaries will enter into
an agreement, contract, commitment or arrangement to do any of the foregoing.
Section 5.2 No Solicitation by the Company.
------------------------------
(a) The Company shall not, nor shall it permit any of its
Subsidiaries to, nor shall it authorize or permit any of its directors, officers
or employees or any investment banker, financial advisor, attorney, accountant
or other representative retained by it or any of its subsidiaries to, directly
or indirectly through another person, (i) solicit, initiate or knowingly
-
encourage (including by way of furnishing non-public information), or take any
other action designed to facilitate, any inquiries or the making of any proposal
which constitutes a Company Takeover Proposal (as defined below) or (ii)
--
participate in any discussions or negotiations regarding any Company Takeover
Proposal; provided, however, that if and to the extent that, at any time prior
-------- -------
to the time of the adoption of this Agreement by the Company's shareholders at
the Special Meeting, the Board of Directors of the Company determines in good
faith, after consultation with outside counsel, that it is necessary to do so in
order to act in a manner consistent with its fiduciary duties to the Company's
shareholders under applicable law, the Company may, in response to any Company
Takeover Proposal which was not solicited by it and which did not otherwise
result from a breach of this Section 5.2(a), and subject to providing prior
notice of any such proposal or any such request for non-public information and
of its decision to take such action to MergerCo and compliance with Section
5.2(c), (x) furnish information with respect to the Company and its Subsidiaries
to any person inquiring about or making a Company Takeover Proposal pursuant to
a customary confidentiality agreement (as determined by the Company based on the
advice of its outside counsel) and (y) participate in discussions or
negotiations regarding such Company Takeover Proposal. For purposes of this
Agreement, "Company Takeover Proposal" means any inquiry, proposal or offer from
any person relating to any Company Takeover Event. For purposes of this
Agreement, "Company Takeover Event" means any direct or indirect acquisition or
purchase of a business that constitutes 50% or more of the net revenues, net
income or assets of the Company and its Subsidiaries, taken as a whole, or 50%
or more of any class of equity securities of the Company, any tender offer or
exchange offer that if consummated would result in any person beneficially
owning 50% or more of any class of any
35
equity securities of the Company, or any merger, consolidation, business
combination, recapitalization, liquidation, dissolution or similar transaction
involving the Company (or any Subsidiary whose business constitutes 50% or more
of the net revenues, net income or assets of the Company and its Subsidiaries
taken as a whole), other than the transactions contemplated by this Agreement.
(b) Except as expressly permitted by this Section 5.2, neither the
Board of Directors of the Company, the Special Committee nor any other committee
shall (i) withdraw or modify or propose publicly to withdraw or modify, in a
-
manner adverse to MergerCo, the approval or recommendation by such Board of
Directors or such committee of the Merger or this Agreement, (ii) approve or
--
recommend, or propose publicly to approve or recommend any Company Takeover
Proposal, or (iii) cause the Company to enter into any letter of intent,
---
agreement in principle, acquisition agreement or other similar agreement (each,
a "Company Acquisition Agreement") related to any Company Takeover Proposal
unless prior to the adoption of this Agreement by the Company's shareholders at
the Special Meeting, the Board of Directors of the Company, to the extent that
it determines in good faith, following the recommendation of the Special
Committee and after consultation with outside counsel, that in light of a
Company Superior Proposal it is necessary to do so in order to act in a manner
consistent with its fiduciary duties. For purposes of this Agreement, a
"Company Superior Proposal" means any proposal made by a third party to acquire,
directly or indirectly, including pursuant to a tender offer, exchange offer,
merger, consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction, for consideration consisting of cash and/or
securities, more than 50% of the combined voting power of the shares of the
Company's capital stock then outstanding or all or substantially all the assets
of the Company and otherwise on terms which the Board of Directors of the
Company determines in its good faith judgment, is more favorable to the
Company's stockholders than the Merger.
(c) In addition to the obligations of the Company set forth in
paragraphs (a) and (b) of this Section 5.2, the Company shall immediately advise
MergerCo orally and in writing of any request for information or of any Company
Takeover Proposal and the material terms and conditions of such request or
Company Takeover Proposal.
36
(d) Nothing contained in this Section 5.2 shall prohibit the Company
from taking and disclosing to its shareholders a position contemplated by Rule
14e-2(a) promulgated under the Exchange Act or from making any disclosure to the
Company's shareholders if, in the good faith judgment of the Board of Directors
of the Company, after consultation with outside counsel, failure so to disclose
would be inconsistent with its obligations under applicable law; provided,
--------
however, that, neither the Company nor its Board of Directors nor any committee
-------
thereof shall withdraw or modify, or propose publicly to withdraw or modify, its
position with respect to this Agreement or the Merger or approve or recommend,
or propose publicly to approve or recommend, a Company Takeover Proposal except
to the extent permitted by Section 5.2(b).
Section 5.3 Access to Information. From the date of this Agreement
---------------------
until the Effective Time, the Company shall, and shall cause each of its
Subsidiaries to, afford to MergerCo and its authorized representatives
reasonable access during normal business hours upon reasonable prior notice to
all of its books and records, including but not limited to tax, financial and
accounting books and records. In addition, during such period, the Company
shall, and shall cause each of its Subsidiaries to, furnish promptly to MergerCo
(a) a copy of each report, schedule, registration statement and other document
-
filed or received by it during such period pursuant to the requirements of the
Exchange Act or other applicable Law and (b) such other information concerning
-
its business, properties and personnel as MergerCo may reasonably request.
MergerCo and its authorized representatives will use all reasonable efforts to
conduct all such inspections in a manner which will minimize any material
disruptions of the business and operations of the Company and its Subsidiaries.
Until the Effective Time, MergerCo will hold any such information in accordance
with the provisions of the certain letter agreement, dated November 5, 1997,
between CD&R and the Company (the "Confidentiality Agreement"), and will cause
such information to be so held by its Representatives (as defined in the
Confidentiality Agreement) of MergerCo. Upon a termination of this Agreement
pursuant to Section 7.1, MergerCo and its Representatives shall return or
destroy (and hold confidential) all information provided pursuant to this
Section 5.3 and all other Evaluation Material (as defined in the Confidentiality
Agreement) pursuant to the procedures set forth in the Confidentiality
Agreement.
37
Section 5.4 Further Action; Reasonable Best Efforts.
---------------------------------------
(a) Upon the terms and subject to the conditions herein provided,
each of the parties hereto agrees to use its reasonable best efforts to take, or
cause to be taken, all action and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement,
including using reasonable best efforts to satisfy the conditions precedent to
the obligations of any of the parties hereto, to obtain all necessary
authorizations, consents and approvals, and to effect all necessary
registrations and filings. Each of the parties hereto will furnish to the other
parties such necessary information and reasonable assistance as such other
parties may reasonably request in connection with the foregoing and will provide
the other parties with copies of all filings made by such party with any
Governmental Entity or any other information supplied by such party to a
Governmental Entity in connection with this Agreement and the transactions
contemplated hereby.
(b) MergerCo and the Company shall use their respective reasonable
best efforts to resolve such objections, if any, as may be asserted with respect
to the transactions contemplated hereby under the laws, rules, guidelines or
regulations of any Governmental Entity. Without limiting the foregoing, each of
the Company and MergerCo shall, as soon as practicable, file (or cause its
respective "ultimate parent entity" within the meaning of the HSR Act to file)
Notification and Report Forms under the HSR Act (as defined below) with the
Federal Trade Commission (the "FTC") and Antitrust Division of the Department of
Justice (the "Antitrust Division") and shall use reasonable best efforts to
respond as promptly as practicable to all inquiries received from the FTC or the
Antitrust Division for additional information or documentation. Each party
hereto shall use its reasonable best efforts to take or cause to be taken all
actions necessary, proper or advisable to obtain any consent, waiver, approval
or authorization relating to any Competition Law that is required for the
consummation of the transactions contemplated by this Agreement. "Competition
Laws" means statutes, rules, regulations, orders, decrees, administrative and
judicial doctrines, and other laws that are designed or intended to prohibit,
restrict or regulate actions having the purpose or effect of monopolization,
lessening of competition or restraint of trade and includes the Xxxx-Xxxxx-
Xxxxxx Antitrust Im-
38
provement Act of 1976, as amended (the "HSR Act") and, to the extent applicable,
equivalent laws of the European Union or the Member States thereof, and of other
countries.
(c) Except as provided in Sections 3.23 with respect to the
transactions contemplated by this Agreement, the Board of Directors of the
Company shall not so long as this Agreement is in effect (a) amend the Rights
Agreement in a manner adverse to the interests of MergerCo, or (b) take any
actions with respect to, or make any determination under, the Rights Agreement,
including, but not limited to, any redemption of the Rights or any action that
would have the effect of facilitating a Company Takeover Proposal or Company
Takeover Event.
Section 5.5 Employee Benefits. (a) Continuation of Employee
----------------- ------------------------
Benefits. For the period commencing at the Effective Time and ending on
--------
December 31, 1998, the Surviving Corporation shall make available to employees
of the Company and the Subsidiaries employee benefits, other than equity based
benefits, that are substantially comparable in the aggregate to the aggregate
employee benefits made available to such employees immediately prior to the
Effective Time, provided that, nothing in this Section 5.5(a) shall be construed
--------
to preclude the provision of a lesser level of benefits to any employee of the
Company or any Subsidiary who consents to such lesser level of benefits in
writing.
(b) Certain Existing Agreements. From and after the Effective Time,
---------------------------
the Surviving Corporation shall honor, pay and perform all obligations under
each employment, severance and special termination agreement with any employee
of the Company or any Subsidiary in accordance with the terms thereof in effect
as of the date hereof (or as the same may be amended from time to time
hereafter, with the prior written approval of the Surviving Corporation).
Section 5.6 Shareholders' Meeting; Form S-4; Proxy Statement.
------------------------------------------------
(a) As promptly as practicable after the date hereof, the Company
shall prepare the Proxy Statement (as defined below), and the Company shall
prepare and file with the SEC, and MergerCo shall cooperate with the Company in
such preparation and filing, the Form S-4 in which the Proxy Statement, will be
included. The Company will use its best efforts, after consultation with
MergerCo, to respond promptly to any comments made by the SEC with respect to
the
39
Form S-4 or the Proxy Statement and use its best efforts to have the Form S-4
declared effective under the Securities Act, as promptly as practicable
following such filing. The Company will use its best efforts to cause a
definitive proxy statement (the "Proxy Statement") to be mailed to its
shareholders as promptly as practicable after the Form S-4 is declared
effective. The Company shall include in the Proxy Statement the recommendation
of the Board and the Special Committee that shareholders of the Company approve
and adopt this Agreement and the transactions contemplated hereby.
(b) The Company shall, as soon as practicable following the date the
Form S-4 is declared effective under the Securities Act, in accordance with
applicable law and the Articles of Organization and the By-laws of the Company,
duly call, set a record date for, give notice of, convene and hold a special
meeting of its stockholders (the "Special Meeting") as promptly as practicable
after the date the Form S-4 is declared effective under the Securities Act for
the purpose of considering and taking action upon this Agreement and such other
matters as may be appropriate at the Special Meeting. The Company shall,
through its Board of Directors, recommend that its shareholders approve the
Merger and shall use all reasonable efforts to solicit from shareholders of the
Company proxies in favor of the approval and adoption of this Agreement and the
transactions contemplated hereby.
(c) The Company and MergerCo shall together prepare and file a
Transaction Statement on Schedule 13E-3 (the "Schedule 13E-3") under the
Exchange Act. Each of MergerCo and the Company shall furnish all information
concerning it, its affiliates and the holders of its capital stock required to
be included in the Schedule 13E-3 and, after consultation with each other, shall
respond promptly to any comments made by the SEC with respect to the Schedule
13E-3.
(d) The information supplied by the Company for inclusion in the Form
S-4, the Proxy Statement or the Schedule 13E-3 shall not, at the time the Form
S-4 is declared effective under the Securities Act, or at the time the Proxy
Statement is mailed, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading or, at the time of the Special Meeting, as then amended or
supplemented, or at the Effective Time, omit to state any material fact
necessary to
40
correct any statement originally supplied by the Company for inclusion in the
Form S-4, the Proxy Statement or the Schedule 13E-3 which has become false or
misleading. If at any time prior to the Effective Time any event relating to the
Company or any of its affiliates, or its, or its affiliates', respective
officers, directors or shareholders, should be discovered which should be set
forth in an amendment of, or a supplement to such Form S-4, Proxy Statement or
Schedule 13E-3, the Company shall promptly so inform MergerCo and will furnish
all necessary information to MergerCo relating to such event and an appropriate
amendment or supplement to such Form S-4, Proxy Statement or Schedule 13E-3 will
thereafter be filed with the SEC by the Company. All documents that the Company
is responsible for filing with the SEC in connection with the transactions
contemplated by this Agreement shall comply in all material respects, both as to
form and otherwise, with the Exchange Act and/or the Securities Act, as the case
may be, and the rules and regulations thereunder. The Company shall also take
any action required to be taken under any applicable state securities laws in
connection with the registration and qualification in connection with the Merger
of Recapitalized Common Stock following the Merger.
(e) The Company will immediately notify MergerCo of (i) the
effectiveness of the Form S-4, (ii) the receipt of any comments from the SEC and
(iii) any request by the SEC for any amendment to the Form S-4 or for additional
information. All filings with the SEC, including the Form S-4 and any amendment
thereto, and all mailings to the Company's stockholders in connection with the
Merger, including the Proxy Statement, shall be subject to the prior review,
comment and approval of MergerCo. No such filing or mailing shall be made
without the prior consent of MergerCo.
(f) The information supplied or to be supplied by MergerCo for
inclusion in the Form S-4, the Proxy Statement or the Schedule 13E-3 shall not,
at the time the Form S-4 is declared effective under the Securities Act, or at
the time the Proxy Statement is mailed, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading or, at the time of the
Special Meeting, as then amended or supplemented, or at the Effective Time, omit
to state any material fact necessary to correct any statement originally
supplied by MergerCo for inclusion in the Proxy Statement or the Schedule 13E-3
which has become false or misleading. If at any time prior to the
41
Effective Time any event relating to MergerCo or any of its affiliates, or its
affiliates' respective officers, directors or shareholders should be discovered
which should be set forth in an amendment of, or a supplement to, such Form S-4,
Proxy Statement or Schedule 13E-3, MergerCo shall promptly so inform the Company
and will furnish all necessary information to the Company relating to such event
and an appropriate amendment or supplement to such Form S-4, Proxy Statement or
Schedule 13E-3 will thereafter be filed with the SEC by the Company. All
documents that MergerCo is responsible for filing with the SEC in connection
with the transactions contemplated by this Agreement shall comply in all
material respects, both as to form and otherwise, with the Exchange Act and the
rules and regulations thereunder.
(g) The Company shall use its reasonable best efforts to cause its
independent accountants to deliver two letters, one dated as of the date on
which the Form S-4 shall become effective under the Securities Act and one dated
as of the Closing Date, each addressed to the Company, in form and substance
reasonably satisfactory to the Company and customary in scope and substance for
comfort letters delivered by independent public accounts in connection with
registration statements similar to the Form S-4.
Section 5.7 Notification of Certain Matters. The Company shall give
-------------------------------
prompt notice to MergerCo, and MergerCo shall give prompt notice to the Company,
of (i) the occurrence or non-occurrence of any event the occurrence or non-
-
occurrence of which would cause any representation or warranty of the Company,
or of MergerCo, as the case may be, contained in this Agreement to be untrue or
inaccurate in any material respect at the Effective Time, (ii) any material
--
failure of the Company, or MergerCo, as the case may be, to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied by
it hereunder and (iii) any event, occurrence, fact, condition, change,
---
development or effect that, individually or in the aggregate, would have or
result in a Material Adverse Effect or a breach of Section 5.1.
Section 5.8 Directors' and Officers' Insurance and Indemnification.
---------------------------------- -------------------
(a) For a period of six years after the Effective Time, the Surviving
Corporation shall indemnify, defend and hold harmless the present and former
officers, directors, employees and agents of the Company and its Subsidiaries in
such capacities ("Indemnified Parties") against all losses,
42
claims, damages, expenses or liabilities arising out of actions or omissions or
alleged actions or omissions occurring at or prior to the Effective Time to the
same extent and on the same terms and conditions (including with respect to
advancement of expenses) provided for in the Company's Articles of Organization
and By-Laws in effect at the date hereof (to the extent consistent with
applicable law).
(b) For a period of six years after the Effective Time, the Surviving
Corporation shall maintain in effect directors' and officers' liability
insurance covering the persons who are currently covered by the Company's
existing directors' and officers' liability insurance with respect to claims
arising from facts or events which occurred at or prior to the Effective Time,
on terms and conditions no less favorable to such directors and officers than
those in effect on the date hereof;
(c) The provisions of this Section 5.8 are intended for the benefit
of, and shall be enforceable by, the respective Indemnified Parties. Nothing in
this Section 5.8 shall limit or restrict the right or ability of the Surviving
Corporation to change its state of domicile to Delaware.
Section 5.9 Publicity. Neither the Company, MergerCo nor any of
---------
their respective affiliates shall issue or cause the publication of any press
release or other announcement with respect to the Merger, this Agreement or
the other transactions contemplated hereby without the prior consultation of the
other party, except as may be required by law or by any listing agreement with a
national securities exchange if all reasonable efforts have been made to consult
with the other party.
Section 5.10 Shareholder Litigation. Each of the Company and MergerCo
----------------------
shall give the other the reasonable opportunity to participate in the defense of
any shareholder litigation against the Company or MergerCo, as applicable, and
its directors relating to the transactions contemplated by this Agreement.
Section 5.11 Recapitalization. Each of the Company and MergerCo
----------------
shall use its best efforts to cause the transactions contemplated by this
Agreement, including the Merger, to be accounted for as a recapitalization and
such accounting treatment to be accepted by their respective accountants and by
the SEC, and each of the Company and
43
MergerCo agrees that it shall take no action that would cause such accounting
treatment not to be obtained.
Section 5.12 Conveyance Taxes. MergerCo and the Company shall
----------------
cooperate in the preparation, execution and filing of all returns,
questionnaires, applications or other documents regarding any real property
transfer or gains, sales, use, transfer, value added, stock transfer and stamp
taxes, any transfer, recording, registration and other fees or any similar taxes
which become payable by the Company or any of its Subsidiaries in connection
with the transactions contemplated by this Agreement that are required or
permitted to be filed on or before the Effective Time.
Section 5.13 Delisting. Each of the parties agrees to cooperate with
---------
each other in taking, or causing to be taken, all actions necessary to delist
the Company Common Stock from the NYSE, provided that such delisting shall not
be effective until after the Effective Time of the Merger. Notwithstanding the
foregoing, the Surviving Corporation will not take any action, for at least five
years after the Effective Time (the "Registration Period"), to terminate the
registration of the Recapitalized Common Stock under Section 12 of the Exchange
Act other than in connection with a merger in which the Surviving Corporation is
not the surviving corporation unless less than 100 record holders of shares of
Recapitalized Common Stock and any other shares of capital stock of the
Surviving Corporation (or any successor entity by merger or otherwise, issued in
respect of such shares, whether as a result of stock splits, stock dividends,
reclassifications, recapitalizations or similar events) are non-affiliates of
the Surviving Corporation. The Surviving Corporation will continue to file
timely and accurately all reports required by Sections 13(a) and 15(d) of the
Exchange Act, until the earlier to occur of (x) the expiration of the
Registration Period and (y) such time as the Recapitalized Common Stock is no
longer registered under Section 12 of the Exchange Act.
Section 5.14 Affiliates. Prior to the Closing Date, the Company
----------
shall deliver to MergerCo a letter identifying all persons who are, at the time
this Agreement is submitted for approval to the stockholders of the Company,
"affiliates" of the Company for purposes of Rule 145 under the Securities Act.
The Company shall use its reasonable best efforts to cause each such person to
deliver to MergerCo on or prior to the Closing Date a written agreement
substantially in the form attached as Exhibit B hereto.
44
Section 5.15 Letter as to Solvency. The parties hereto shall engage
---------------------
an appraisal firm to deliver a letter addressed to the Board of Directors of the
Company and the Company (and on which the Board of Directors shall be entitled
to rely) indicating that immediately after the Effective Time, and after giving
effect to the Merger and the financings contemplated by this Agreement and any
other transactions contemplated in connection with the Merger, the Surviving
Corporation will not (i) be insolvent or (ii) have unreasonably small capital
- --
with which to engage in its business
ARTICLE VI
CONDITIONS
Section 6.1 Conditions to Each Party's Obligation To Effect the
---------------------------------------------------
Merger. The respective obligation of each party to effect the Merger shall be
------
subject to the satisfaction on or prior to the Closing Date of each of the
following conditions (any or all of which may be waived by the parties hereto in
writing, in whole or in part, to the extent permitted by applicable law):
(a) No statute, rule, order, decree or regulation shall have been
enacted or promulgated by any Governmental Entity of competent jurisdiction
(whether temporary, liminary or permanent) which is in effect and has the
effect of prohibiting the consummation of the Merger or making the Merger
illegal;
(b) There shall be no order or injunction of a Governmental Entity of
competent jurisdiction (whether temporary, preliminary or permanent) in effect
precluding, restraining, enjoining or prohibiting consummation of the Merger;
(c) The Form S-4 (including the Proxy Statement) in form and
substance consistent with the intent of the Parties set forth in Section 5.11
shall have become effective under the Securities Act and shall not be the
subject of any stop order or proceedings seeking a stop order, and any material
"blue sky" and other state securities laws applicable to the registration and
qualification of the Recapitalized Common Stock following the Merger shall have
been complied with.
45
(d) The applicable waiting period under the HSR Act with respect to
the actions contemplated by this Agreement shall have expired or been
terminated; and
(e) Other than filing the Articles of Merger in accordance with the
MBCL and the Certificate of Merger in accordance with the DGCL, all
authorizations, consents and approvals of all Governmental Entities required to
be obtained prior to consummation of the Merger shall have been obtained, except
for such authorizations, consents, and approvals the failure of which to be
obtained would not have a Material Adverse Effect.
(f) The Board of Directors of the Company and the Company shall have
received the letter contemplated by Section 5.15.
Section 6.2 Conditions to the Obligation of the Company to Effect the
---------------------------------------------------------
Merger. The obligation of the Company to effect the Merger is further subject
------
to the satisfaction or waiver at or prior to the Effective Time of the following
conditions:
(a) The representations and warranties of MergerCo contained in this
Agreement shall be true and correct at and as of the date hereof, and true and
correct in all respects (in the case of any representation or warranty
containing any materiality qualification) or in all material respects (in the
case of any representation or warranty without any materiality qualification) at
and as of the Effective Time as if made at and as of such time; and
(b) MergerCo shall have performed in all material respects its
obligations under this Agreement required to be performed by it at or prior to
the Effective Time pursuant to the terms hereof.
Section 6.3 Conditions to Obligations of MergerCo to Effect the
---------------------------------------------------
Merger. The obligations of MergerCo to effect the Merger are further subject to
------
the satisfaction or waiver at or prior to the Effective Time of the following
conditions:
(a) The representations and warranties of the Company contained in
this Agreement shall be true and correct at and as of the date hereof, and true
and correct in all respects (in the case of any representation or warranty
containing any materiality qualification) or in all material respects (in the
case of any representation or warranty
46
without any materiality qualification) at and as of the Effective Time as if
made at and as such time;
(b) The Company shall have performed in all material respects its
obligations under this Agreement required to be performed by it at or prior to
the Effective Time pursuant to the terms hereof;
(c) MergerCo and the Company shall have received sufficient funds to
pay the Merger Consideration, repay or redeem all of the existing indebtedness
of the Company and its Subsidiaries, and otherwise enable MergerCo to consummate
the transactions contemplated hereby and to meet the working capital
requirements of the Surviving Corporation pursuant to financing arrangements and
definitive financing agreements completed to the satisfaction of MergerCo in its
reasonable judgment;
(d) The number of Dissenting Shares shall not exceed 5% of the issued
and outstanding shares of Company Common Stock;
(e) No event, occurrence, fact, condition, change, development or
effect shall exist or have occurred or come to exist or been threatened since
September 30, 1997 that, individually or in the aggregate, has had or resulted
in, or could reasonably be expected to become or result in, a Material Adverse
Effect;
(f) All outstanding Rights issued and outstanding under the Rights
Agreement shall have been terminated and the Rights Agreement shall have
terminated and be of no further force or effect, as contemplated by Section
3.23.
ARTICLE VII
TERMINATION
Section 7.1 Termination. Notwithstanding any thing herein to the
-----------
contrary, this Agreement may be terminated and the Merger may be abandoned at
anytime prior to the Effective Time, whether before or after shareholder
approval thereof:
(a) By the mutual consent of the Boards of Directors of MergerCo and
the Company.
(b) By either the Company, on the one hand, or MergerCo, on the other
hand, if: (i) the Merger has not been
-
47
consummated on or prior to June 30, 1998 or such other date, if any, as MergerCo
and the Company shall agree upon (provided that the right to terminate this
Agreement under this Section 7.1(b)(i) shall not be available to a party whose
failure to fulfill any obligation under this Agreement has been the cause of or
resulted in the failure of the Effective Time to occur on or before such date);
or (ii) any Governmental Entity shall have issued a statute, order, decree or
--
regulation or taken any other action (which statute, order, decree, regulation
or other action the parties hereto shall use their best efforts to lift), in
each case permanently restraining, enjoining or otherwise prohibiting the Merger
or making the Merger illegal and such statute, order, decree, regulation or
other action shall have become final and non-appealable.
(c) By the Company, (i) if holders of two-thirds of the outstanding
-
Company Common Stock fail to approve and adopt this Agreement and the
transactions contemplated hereby at the Special Meeting (including any
postponement or adjournment thereof), or (ii) if, prior to the Effective Time,
--
either of the Board of Directors of the Company or the Special Committee, shall
have withdrawn, or modified or changed in a manner adverse to MergerCo its
approval or recommendation of this Agreement or the Merger pursuant to Section
5.2; provided in the case of (ii) that such termination shall not be effective
--------
until the Company has made payment to CD&R (as defined in Section 8.1(b)) of the
Fee (as defined in Section 8.1(b)) and has either paid to MergerCo or deposited
with a mutually acceptable escrow agent $5 million for reimbursement to MergerCo
of Expenses (as defined in Section 8.1(b)), in each case in accordance with
Section 8.1.
(d) By the Company, upon 15 days' prior written notice, in the event
of a material breach of any representation, warranty, covenant or agreement on
the part of MergerCo such that the condition set forth in Section 6.2(a) or
6.2(b) would not be satisfied as of the Effective Time, which breach is not
cured prior to the expiration of such 15 day period (provided that if such
--------
breach is not curable, the Company may terminate this Agreement immediately
under this Section 7.1(d)); except where the Company is in material breach of
any representation, warranty, covenant or agreement as provided in Section
7.1(e).
(e) By MergerCo, upon 15 days' prior written notice, in the event of
a material breach of any
48
representation, warranty, covenant or agreement on the part of the Company such
that the condition set forth in Section 6.3(a) or 6.3(b) would not be satisfied
as of the Effective Time, which breach is not cured prior to the expiration of
such 15 day period (provided that if such breach is not curable, MergerCo may
--------
terminate this Agreement immediately under this Section 7.1(e)); except where
MergerCo is in material breach of any representation, warranty, covenant or
agreement as provided in Section 7.1(d).
(f) By MergerCo, if (i) holders of at least two-thirds of the
-
outstanding Company Common Stock fail to approve and adopt this Agreement and
the transactions contemplated hereby at the Special Meeting (including any
postponement or adjournment thereof); (ii) either the Board of Directors of the
--
Company or the Special Committee withdraws, modifies or changes its
recommendation of this Agreement or the Merger in a manner adverse to MergerCo
or shall have resolved to do any of the foregoing or the Board of Directors of
the Company shall have recommended to the shareholders of the Company any
Company Takeover Proposal or resolved to do so; or (iii) a tender offer or
---
exchange offer for outstanding shares of capital stock of the Company then
representing 20% or more of the combined power to vote generally for the
election of directors is commenced, and the Board of Directors of the Company
does not recommend that stockholders not tender their shares into such tender or
exchange offer.
Section 7.2 Effect of Termination. In the event of the termination
---------------------
of this Agreement as provided in Section 7.1, written notice thereof shall
forthwith be given by the terminating party or parties to the other party or
parties specifying the provision hereof pursuant to which such termination is
made, and this Agreement shall forthwith become null and void, and there shall
be no liability on the part of MergerCo or the Company, except as set forth in
Section 8.1 hereof and except with respect to the requirement to comply with
the Confidentiality Agreement and return, destroy or hold Evaluation Material
pursuant to the procedures set forth therein or set forth in Section 5.3;
provided that nothing herein shall relieve any party from any liability or
--------
obligation with respect to any wilful breach of this Agreement.
ARTICLE VIII
MISCELLANEOUS
49
Section 8.1 Fees and Expenses. (a) Except as contemplated by this
-----------------
Agreement, all costs and expenses incurred in connection with this Agreement and
the consummation of the transactions contemplated hereby shall be paid by the
party incurring such expenses except that the Company shall bear and pay the
costs and expenses incurred in connection with (i) the preparation, filing,
-
printing and mailing of the Form S-4 and the Proxy Statement (including SEC
filing fees) and (ii) the filing of the Schedule 13E-3.
--
(b) The Company shall promptly pay Xxxxxxx, Dubilier & Rice, Inc.
("CD&R") a termination fee of $24.5 million (the "Fee") (x) in the event that
-
this Agreement is terminated pursuant to Sections 7.1(c)(i), 7.1(e) or 7.1(f)(i)
or (iii), provided that (A) prior to the time this Agreement is terminated or
--------
the time of the Special Meeting, as the case may be, a Company Takeover Proposal
shall have been publicly announced or shall have become publicly known and (B)
during the term of this Agreement or within twelve months after the termination
of this Agreement a Company Takeover Event shall occur, (y) the Company
-
terminates this Agreement pursuant to Section 7.1(c)(ii), or (z) MergerCo
-
terminates this Agreement pursuant to Section 7.1(f)(ii). In addition, the
Company shall promptly pay MergerCo an amount equal to all Expenses in the event
of any termination of this Agreement other than a termination resulting from (i)
-
the failure by MergerCo to fulfill any of their material obligations under this
Agreement or (ii) the failure of the condition specified in Section 6.1(c) to be
--
satisfied because recapitalization accounting treatment is not available for the
transactions contemplated by this Agreement, including the Merger. All such
payments shall be in immediately available funds. In the event that the Company
shall pay MergerCo an amount in respect of Expenses as contemplated by the
proviso to Section 7.1(c), and such amount shall subsequently prove to exceed
the amount of Expenses actually incurred, MergerCo shall refund the excess to
the Company. The term "Expenses" means all documented out-of-pocket fees, costs
and other expenses, not to exceed $5 million, incurred or assumed by MergerCo or
incurred on its behalf in connection with this Agreement or any of the
transactions contemplated hereby, including but not limited to in connection
with the negotiation, preparation, execution and performance of this Agreement,
the structuring and financing of the Merger and the other transactions
contemplated hereby, or any commitments or agreements relating to such
financing.
50
(c) The Company acknowledges that the agreements contained in this
Section 8.1 are an integral part of the transactions contemplated by this
Agreement, and that, without these agreements, MergerCo would not enter into
this Agreement; accordingly, if the Company fails promptly to pay the amount due
pursuant to this Section 8.1, and, in order to obtain such payment, MergerCo
commences a suit which results in a judgment against the Company for any of the
Fees or Expenses set forth in this Section 8.1, the Company shall pay to
MergerCo its costs and expenses (including attorneys' fees and expenses) in
connection with such suit, together with interest on the amount of such Fees and
Expenses at the rate on six-month U.S. Treasury obligations plus 300 basis
points in effect on the date such payment was required to be made.
(d) This Section 8.1 shall survive any termination of this Agreement.
Section 8.2 Amendment; Waiver.
-----------------
(a) This Agreement may be amended by the parties hereto, by action
taken or authorized by their respective Boards of Directors (and, in the case of
the Company, the Special Committee), at any time before or after approval by the
shareholders of the Company of the matters presented in connection with the
Merger, but after any such approval no amendment shall be made without the
approval of such shareholders if such amendment changes the Merger Consideration
or alters or changes any of the other terms or conditions of this Agreement if
such alteration or change would materially adversely affect the rights of such
shareholders. Except as otherwise provided in Section 2.3 with respect to
Schedule 2.3, this Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto.
(b) At any time prior to the Effective Time, the parties may (i)
-
extend the time for the performance of any of the obligations or other acts of
the other parties hereto, (ii) waive any inaccuracies in the representations and
--
warranties of the other parties contained herein or in any document, certificate
or writing delivered pursuant hereto or (iii) waive compliance with any of the
---
agreements or conditions of the other parties hereto contained herein. Any such
extension or waiver by the Company shall require the consent of the Special
Committee or the Board of Directors of the Company. Any agreement on the part
of any party to any such extension or waiver shall be valid only if
51
set forth in an instrument in writing signed on behalf of such party. Any such
waiver shall constitute a waiver only with respect to the specific matter
described in such writing and shall in no way impair the rights of the party
granting such waiver in any other respect or at any other time. Neither the
waiver by any of the parties hereto of a breach of or a default under any of the
provisions of this Agreement, nor the failure by any of the parties, on one or
more occasions, to enforce any of the provisions of this Agreement or to
exercise any right or privilege hereunder, shall be construed as a waiver of any
other breach or default of a similar nature, or as a waiver of any of such
provisions, rights or privileges hereunder. The rights and remedies herein
provided are cumulative and none is exclusive of any other, or of any rights or
remedies that any party may otherwise have at law or in equity. The rights and
remedies of any party based upon, arising out of or otherwise in respect of any
inaccuracy or breach of any representation, warranty, covenant or agreement or
failure to fulfill any condition shall in no way be limited by the fact that the
act, omission, occurrence or other state of facts upon which any claim of any
such inaccuracy or breach is based may also be the subject matter of any other
representation, warranty, covenant or agreement as to which there is no
inaccuracy or breach. The representations and warranties of the Company shall
not be affected or deemed waived by reason of any investigation made by or on
behalf of MergerCo (including but not limited to any of its advisors, counsel,
consultants or representatives) or by reason of the fact that MergerCo or any of
such advisors, counsel, consultants or representatives knew or should have known
that any such representation or warranty is or might be inaccurate.
Section 8.3 Survival. The respective representations and warranties
--------
of MergerCo and the Company contained herein or in any certificates or other
documents delivered prior to or as of the Effective Time shall not survive
beyond the Effective Time. The covenants and agreements of the parties hereto
(including the Surviving Corporation after the Merger) shall survive the
Effective Time without limitation (except for those which, by their terms,
contemplate a shorter survival period).
Section 8.4 Notices. All notices and other communications hereunder
-------
shall be in writing and shall be deemed given upon (a) transmitter's
-
confirmation of a receipt of a facsimile transmission, (b) confirmed delivery
-
by a standard overnight carrier or when delivered by hand or
52
(c) the expiration of five business days after the day when mailed in the
-
United States by certified or registered mail, postage prepaid, addressed at the
following addresses (or at such other address for a party as shall be specified
by like notice):
(a) if to the Company, to:
Dynatech Corporation
Corporate Headquarters
3 New England Executive Park
Xxxxxxxxxx, Xxxxxxxxxxxxx 00000
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
Attention: General Counsel
and
Attention: Xxxx X. X. Xxxxxxxx, Esq.
with a copy to:
Xxxx & Xxxx LLP
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
Attention: Xxxxx Xxxx
and with a copy to:
Ropes & Xxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
Attention: Xxxx X. Xxxxx, Esq.
(b) if to MergerCo, to:
CDRD Merger Corporation
c/o the Xxxxxxx, Dubilier & Rice
Fund V Limited Partnership
0000 Xxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
53
with a copy to
Xxxxxxx, Dubilier & Rice, Inc.
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
Attention: Xxxxx X. Xxxx
and with a copy to:
Debevoise & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxxx, Esq.
Section 8.5 Interpretation. When a reference is made in this
--------------
Agreement to Sections, such reference shall be to a Section of this Agreement
unless otherwise indicated. Whenever the words "include", "includes" or
"including" are used in this Agreement they shall be deemed to be followed by
the words "without limitation". The phrase "made available" when used in this
Agreement shall mean that the information referred to has been made available
to the party to whom such information is to be made available. The words
"affiliates" and "associates" when used in this Agreement shall have the
respective meanings ascribed to them in Rule 12b-2 under the Exchange Act. The
phrase "beneficial ownership" and words of similar import when used in this
Agreement shall have the meaning ascribed to it in Rule 13d-3 under the
Exchange Act.
Section 8.6 Headings; Schedules. The headings contained in this
-------------------
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Disclosure of any matter
pursuant to any Schedule to the Disclosure Schedule shall not be deemed to be an
admission or representation as to the materiality of the item so disclosed.
Section 8.7 Counterparts. This Agreement may be executed in two or
------------
more counterparts, each of which shall be deemed an original but all of which
shall be considered one and the same agreement.
Section 8.8 Entire Agreement; Third Party Beneficiaries. This
-------------------------------------------
Agreement, together with the
54
Confidentiality Agreement, (a) constitutes the entire agreement, and supersedes
all prior agreements and understandings (written and oral), among the parties
with respect to the subject matter hereof and (b) except for the provisions of
Sections 5.8, 5.13 and 8.1(b), are not intended to confer upon any person other
than the parties any rights or remedies.
Section 8.9 Severability. If any term, provision, covenant or
------------
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void, unenforceable or against its regulatory
policy, the remainder of the terms, provisions, covenants and restrictions of
this Agreement shall remain in full force and effect and shall in no way be
affected, impaired or invalidated.
Section 8.10 Governing Law. This Agreement shall be governed and
-------------
construed in accordance with the laws of the State of New York, except to the
extent that it is mandatorily governed by the laws of the Commonwealth of
Massachusetts.
Section 8.11 Assignment. Neither this Agreement nor any of the
----------
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties; provided, that MergerCo may assign this
--------
Agreement to any Subsidiary of MergerCo. This Agreement will be binding upon,
inure to the benefit of and be enforceable by, the parties and their respective
successors and assigns.
55
IN WITNESS WHEREOF, MergerCo and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized as
of the date first written above.
DYNATECH CORPORATION
By: /s/ Xxxx X. Xxxx
--------------------------------
Name: Xxxx X. Xxxx
Title: Chairman, President
and Chief Executive
Officer
[Seal]
By: /s/ Xxxxx X. Xxxxx
--------------------------------
Name: Xxxxx X. Xxxxx
Title: Corporate Vice President,
Chief Financial Officer
and Treasurer
CDRD MERGER CORPORATION
By: /s/ Xxxxx X. Xxxx
--------------------------------
Name: Xxxxx X. Xxxx
Title: President
[Seal]
By: /s/ Xxxxxx X. Xxxx, III
--------------------------------
Name: Xxxxxx X. Xxxx, III
Title: Vice President and
Treasurer
56
